# Understanding the Retail Revitalization Act of 2021

This bill makes changes to how real estate investment trusts (REITs) can do business with companies they own or are closely connected to. To understand what this means, you need to know that REITs are companies that own buildings and collect rent from tenants. They get special tax benefits from the government, but in exchange, they have to follow certain rules about who they can rent to and how much rent they can collect from related parties.

Currently, if a REIT owns 10 percent or more of a company that rents space from the REIT, there are strict limits on how much rent the REIT can charge and still keep its special tax status. This bill dramatically loosens those restrictions by changing the threshold from 10 percent ownership to more than 50 percent ownership. In practical terms, this means a REIT can now have much closer financial ties to the companies renting from it without triggering the old restrictions. For example, a REIT could own a significant stake in a retail store and charge it market-rate rent without worrying about violating REIT rules, as long as the REIT doesn't own more than half the store.

The bill also makes similar changes to how ownership is calculated when determining these relationships, making it easier for REITs to work with related companies. Additionally, it adjusts rules for "taxable REIT subsidiaries"—special subsidiary companies that REITs can use—by changing a key percentage threshold from 90 percent to 50 percent. These changes take effect immediately for tax years after the bill becomes law. The overall effect is to give REITs more flexibility in their business dealings with companies they're connected to, which supporters argue could help revitalize retail spaces by allowing closer partnerships between property owners and retail tenants.

Retail Revitalization Act of 2021

Rep. Schneider, Bradley Scott [D-IL-10]

Retail Revitalization Act of 2021 This bill modifies rules related to rents received by real estate investment trusts (REITs) from related parties. It increases the permissible stock ownership and constructive stock ownership percentage in a REIT to 50% and modifies rules for taxable REIT subsidiaries.