What is a REIT?
A real estate investment trust (REIT) is an entity that:
- combines the capital of many investors to, among other things, acquire or invest in commercial real estate;
- allows individual investors to invest in a real estate portfolio under professional management through the purchase of interests, typically shares;
- must pay distributions to its stockholders equal to at least ninety percent (90.0%) of its “REIT” taxable income;” and
- is not typically subject to federal corporate income taxes, thus eliminating the “double taxation” (both corporate and stockholder level taxes) generally applicable to a corporation.
Q: What is Inland American Real Estate Trust, Inc.?
A: Inland American
Real Estate Trust, Inc., which we sometimes refer to as Inland American
or the Company, was formed on October 4, 2004 to acquire and develop commercial real estate, primarily multi-family, office and industrial/distribution buildings, lodging facilities and retail properties, as well as triple-net, single-use properties of a similar type, located in the United States and Canada. These assets maybe acquired directly by purchasing the property also known as a “fee interest” or
indirectly by purchasing interests, including controlling interests,
in real estate investment trusts, or REITs, or other “real estate
operating companies” that own these assets, such as real estate
management companies and real estate development companies. Inland American currently qualifies to be taxed
as a REIT for federal and state income tax purposes. Inland American was closed to new investments on April 6, 2009.
Q: Does Inland American have a share repurchase program?
A: Inland American's shares are not listed for trading on any national securities exchange and it does not expect to list shares in the near future. A public market may never develop. You may not be able to sell your shares when you desire or at a price equal to or greater than the offering price.
As Inland American was reaching the 5% limit of shares that it was permitted to redeem under its share repurchase program, its board of directors voted to suspend the program until further notice, effective March 30, 2009. Inland American has stated that this action allows it to, among other things, maintain a strong cash position to meet any financial challenges arising in an uncertain economy. Click Here for the notification sent to stockholders.
Q: Will I receive distributions and, if so, how often?
A: The actual amount and timing of distributions will be determined by Inland American’s board of directors in its discretion and typically will depend on the amount of funds available for distribution, which is impacted by current and projected cash requirements, tax considerations and other factors. Inland American’s distribution rate and payment frequency may vary from time to time. However, in order to remain qualified as a REIT, Inland American must make distributions equal to at least ninety percent (90.0%) of its “REIT taxable income” each year See "Risk Factors – Risks Related to Our Business” in Inland American's most recent Annual Report on Form 10-K for additional discussion regarding the amount and timing of distributions.
On January 20, 2009 Inland American's board of directors voted unanimously to determine each monthly distribution rate on an adjustable basis. Read More
Inland American currently pays monthly distributions. Beginning with the distribution for the month of January 2009, and through the distribution for the month of January 2010, Inland American has paid cash distributions at a rate equal to $0.50 per share on an annualized basis. |
Q: Are distributions I receive taxable?
A: Yes, distributions that you receive will be considered ordinary income to the extent they come from current and accumulated earnings and profits. However, because depreciation expense reduces taxable income but does not reduce cash available for distribution, Inland American expects a portion of your distributions will be considered a return of capital for tax purposes. These amounts will not be subject to tax immediately but will instead reduce the tax basis of your investment in effect deferring a portion of your tax until you sell your shares or we liquidate. Because each investor’s tax implications are different, you should consult with your tax advisor.
Q: When will I get my tax information?
A: Your Form 1099 tax information will be mailed by January 31st of each year.
Q: Do you have a reinvestment program through which I can reinvest my distributions in additional shares?
A: Yes, Inland American's distribution reinvestment plan allows stockholders to reinvest distributions in additional shares at $9.50 per share. The terms of this plan may, however, be amended or the plan terminated in the sole discretion of its board. |
