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Pension Fund & Tax Exempt Investments

Backed by a strong tax practice, the Eversheds Sutherland (US) pension fund and tax-exempt real estate investment practice has maintained a standard of excellence for more than four decades. “The team is as expert and talented as any I’ve come across” – Legal 500 2008

Eversheds Sutherland helps pension funds and tax-exempt real estate investors navigate their regulated investment environment.

The representation of pension funds and other tax-exempt investors in real estate presents special challenges and requires the application of the distinct experience that Eversheds Sutherland has acquired over more than four decades. In addition to real estate matters, we focus on regulatory considerations that drive the tax-exempt segment of the real estate investment world. Protecting the tax-exempt status of these investors and investments is our top priority. We familiarize ourselves with the internal policies of funds and the fiduciary duty of responsible parties.

Pension funds are subject to particular issues, such as ERISA matters (including fiduciary issues and plan asset rules), federal income tax (unrelated business taxable income – UBTI), debt financed income (fractions rule), risk management and risk mitigation, state and local tax, transfer taxes, compliance and governmental plan guidelines. Furthermore, where the fund is domiciled may add local law implications.

Nowhere is a strong tax practice more important than in tax-exempt investing, and that has been our firm's focus throughout its history. In addition to federal taxes, we regularly provide advice pertaining to state and local tax issues. Eversheds Sutherland’s goal is always to assure that the tax-exempt investor will realize the full value and benefit of its tax exemptions.

Why Eversheds Sutherland

Acquisition and financing experience. Eversheds Sutherland has been involved in transactions in this area totaling billions of dollars. In addition to our representation in acquisition and financing transactions, we often provide post-closing continuing legal services, particularly with respect to leasing, state and federal tax issues and ERISA compliance.

Joint venture experience. Eversheds Sutherland regularly represents institutional, tax-exempt investors in forming joint ventures and other co-investment entities with large private and publicly-traded REITs and private equity funds to acquire commercial real estate projects and portfolios. We also have significant experience in connection with programmatic added value joint ventures with established developers to develop specific classes of assets. These transactions often involve the acquisition and development of portfolios in excess of one billion dollars in asset values.

Adept at equity formation. We regularly handle major equity formation transactions involving tax-exempt investors through joint ventures, syndicated partnerships, private placements and stock offerings.

Litigation. Eversheds Sutherland has handled a number of litigation matters for pension fund investor clients, including substantial claims for latent defects and construction-related deficiencies, claims for refunds of state and local taxes and other litigation matters. We have found that a national reputation for excellence in litigation often improves chances of settlements before litigation is needed.

ERISA issues. For more than 30 years, we have advised pension plan sponsors and funds on compliance with applicable Department of Labor legal requirements. We currently provide experienced counsel on the full range of legal issues raised by pension investments, management and other arrangements for over 100 private employers, Fortune 100 and 500 companies, as well as major public and private pension plans.

Thought leaders. Our real estate lawyers are active members of key legal and professional associations, including the American College of Real Estate Lawyers, the American College of Mortgage Attorneys, NAIOP, ICSC, ULI, PREA and national, state and local bar association sections and committees.

Nuts and Bolts

The representation of tax-exempt investors in real estate presents unique challenges and requires the application of special analysis in the following areas:

  •  Property operations to minimize unrelated taxable business income
  •  Financing structures
  •  Prohibited transaction rules
  •  Plan asset rules
  •  Structuring transactions
  •  Qualification as real estate operating companies (REOC) or venture capital operating companies (VCOC)
  •  Organization of title holding entities and title holding entity structures
  •  Securing IRS determination of tax-exempt qualification for title holding entities
  •  The fractions rule
  •  State and local laws
  •  Securities lending by a plan
  •  Allocation of voting responsibility for stock owned by a plan
  •  Joint investment by a plan and a party in interest
  •  Timber and agribusiness investment and financing transactions
  •  Pooled real estate investment vehicles
  •  Fixed return products
  •  Bank collective trust funds, variable insurance products and mutual funds

In mortgage-lending transactions, we advise tax-exempt sponsors of debt funds in all types of financing, including:

  •  Construction and permanent loans
  •  Multistate financings
  •  Leasehold financing
  •  Sale/leaseback transactions
  •  Short-term variable rate financing
  •  Participating mortgages
  •  Subordinate and wrap-around financing
  •  Mezzanine debt financing

Take Action

Eversheds Sutherland protects the investors' tax-exempt status with an approach that goes beyond the usual financial considerations and focuses on the unique, regulation-driven challenges this class of real estate investor faces—ensuring the client receives the full benefit from its tax-exempt status.

Selected Experience

Our Story

Eversheds Sutherland is an international law firm helping the Fortune 100, industry leaders, sector innovators and business entrepreneurs solve their biggest challenges and reach their business goals. Dedicated to unfaltering excellence in client service, we are known for our business savvy and industry intelligence, providing creative and custom solutions for each of our clients. Industry and business experience makes the difference for our clients.

click to watch Videocast: Eversheds Sutherland SALT Scoreboard – 2016 Year in Review
Videocast: Eversheds Sutherland SALT Scoreboard – 2016 Year in Review
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