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Rule 144: Resale of REIT Shares in Exchange for OP Units

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Posted by Daniel P. Adams, Goodwin Procter LLP, on Saturday, April 2, 2016
Editor's Note: Daniel P. Adams is a partner in the Business Law Department at Goodwin Procter LLP. This post is based on a Goodwin Procter publication by Mr. Adams, Yoel Kranz, Audrey S. Leigh, and David H. Roberts.

On March 14, 2016, the SEC issued a no-action letter [1] permitting holders of shares of common stock of a publicly traded REIT, or REIT shares, received in exchange for privately placed units of the REIT’s operating partnership, or OP units, to tack the holding period of the OP units to the REIT shares for purposes of Rule 144. This new position is a very significant change from the way Rule 144 has been interpreted historically by the SEC, and may lead to the elimination of registration rights in many OP unit transactions as well as to changes in the way OP unit transactions are structured.

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