IRS Issues PLR Excluding REIT Joint Venture Loans from Asset Tests

The IRS has issued a private letter ruling on I.R.C. §856 and Treas. Reg. §1.856 clarifying that loans between a real estate investment trust (REIT) and joint ventures proportionate to the REIT’s capital interest are excluded from asset calculation requirements under §856(c)(4), with the portion of loans from the REIT to joint ventures commensurate with the REIT’s capital interest excluded from total assets for purposes of the 75 percent real estate asset test and other asset diversification tests, and the REIT’s proportionate share of loans from joint ventures to the REIT similarly excluded from asset calculations based on the principle ...