The Osage 1031 UPREIT structure consists of three phases, which Osage designs and administers on behalf of clients.
Phase 1: Syndication
The Sponsor, a subsidiary of the REIT’s operating partnership (the “REIT OP”), offers interests in a Delaware statutory trust (DST) that owns real property
Properties held by the DST may be contributed from the REIT OP’s existing portfolio or bought from a third party seller
Phase 2: DST
The REIT OP maintains control of the properties and its right to the property cash flows through a 20-year, fixed rate Master Lease Agreement
Distributions to investors come from Master Lease rents, less applicable fees and expenses
Phase 3: FMV Purchase Option
The REIT OP will have an FMV Purchase Option giving it the right, but not the obligation, to acquire investors’ DST interests beginning 2 years from the end of the DST syndication period
If the FMV Purchase Option is exercised, investors generally will receive OP Units in a tax-deferred UPREIT transaction