Recent Legislation Affords Greater Flexibility in REIT Health Care Facility Ownership

Thanks to recent legislation regarding the structure of real estate investment trust (REIT) ownership of health care facilities, restrictions on REIT ownership have been modified to the benefit of REITs.

A taxable REIT subsidiary may now lease a health care facility directly from its parent REIT, hold the licenses applicable to operating such a facility, and then use an independent contractor to operate the facility.

Formerly, REITs had to lease a health care facility through a third-party tenant, who would then utilize an independent contractor to manage the facility. This new legislation allows REITs to stop using third-party tenants as accommodation parties and thus enjoy the cost savings associated with eliminating what in some cases is an unnecessary party from the health care facility ownership structure.

Legal News Alert is part of our ongoing commitment to providing up-to-the minute information about pressing concerns or industry issues affecting our senior living clients and colleagues.

If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or:

Michael A. Okaty
Orlando, Florida
407.244.3229
[email protected]