Cortland is proposing to acquire a US rental portfolio through acquiring the units of Pure Multi-Family REIT LP
It is proposed that an LLC (the “Purchaser”) that is an affiliate of a third party (Cortland) acquire for cash all the (listed) Class A units and (unlisted but convertible) Class B units of Pure Multi-Family REIT LP (“Pure Multi-Family”).. The US rental portfolio of Pure Multi-Family is held through a US private REIT.
The LPA for Pure Multi-Family REIT LP will be amended to provide for a special allocation of income to the unitholders under s. 96(1.01). However, there is no mention of there being any foreign accrual income from the US REIT being allocated for s. 96(1.01) purposes to Pure Multi-Family REIT LP under the stub period accrual rule in s. 91(1.2) (there presumably is none).
Canadian unitholders will not be subject to FIRPTA tax assuming that they comply with the 5%/regularly traded exemption. Closing is conditional on an opinion that the US REIT qualifies as such.
Neal Armstrong. Summary of Pure Multi-Family REIT LP Circular under Mergers & Acquisitions – REIT/Income Fund/LP Acquisitions.