Agellan REIT will qualify as a “true” cross-border Canadian REIT

It is anticipated by the in-progress Agellan REIT that it will qualify under the current Canadian REIT rules (which require that 75% of its revenues be from rents or mortgage interest) notwithstanding that over half of its consolidated revenues will be derived from US properties held underneath a taxable US subsidiary.  This will be an easier result to achieve under the October 24, 2012 draft amendments, which will recharacterize cross-border interest and dividends as rental revenues to the extent that is what they are derived from.

The structure also contemplates that future US property acquisitions could entail the issuance of exchangeable LP units out of a subsidiary US LP.

Neal Armstrong.  Summary of Agellan REIT preliminary prospectus under Cross-border REITs.