Calloway is eliminating its 2-tier trust structure in order to convert for accounting reasons to a closed-end fund

Calloway REIT currently is an open-end mutual fund trust holding rental limited partnerships through a subsidiary trust ("Holdings Trust").  In connection with ensuring that exchangeable LP units held in the subsidiary LPs will not be treated as debt for accounting purposes, it will convert to a closed-end fund pursuant to a ruling it obtained on August 13, 2013.  However, to so qualify, Calloway must get rid of  Holdings Trust (see ss. 108(2)(b)(iii) and (iv), and perhaps (v)), which it intends to do in 2014.  (Eliminating Holdings Trust also presumably would increase the rental gross REIT revenues which are allocated to Calloway.)

Accordingly, Holdings Trust will transfer its assets under s. 107.4 to a newly-formed subsidiary unit trust ("MFT") of  Calloway, with 3% of MFT's units then being distributed to the Calloway unitholders in order to qualify MFT as a mutual fund trust.  MFT then will be merged into Calloway under s. 132.2.

Neal Armstrong.  Summary of Calloway REIT AIF for its 2013 year under Other – Subsidiary S. 132.2 Mergers – Subtrust Elimination.