Shiukay Hung, partner and co-chair of the national real estate tax practice at DLA Piper, participated in a video interview during Nareit’s REITwise: 2024 Law, Accounting & Finance Conference held March 19-21 in Hollywood, Fla.
Hung discussed crucial insights into the complexities of real estate taxation, highlighting surprising challenges faced by seasoned real estate operators. He emphasized the necessity for adaptation, clarifying how traditional leasing agreements may not align with REIT regulations.
He also delved into the realm of hedging within REITs, explaining its significance and the regulatory framework surrounding it. He articulated the balancing act required between financial instruments and real estate income, noting the permissibility of certain hedging strategies under tax rules.
“A hedge is a kind of complicated thing,” he said. “[It’s] some kind of financial instrument [and] is really derivative, so that doesn't look and feel a lot like rents from real property—in fact, it is not rents from real property.”
Regarding compliance, Hung underscored the importance of rectifying inadvertent errors promptly. He advises proactive measures, urging REITs to establish robust operational guidelines and global hedging policies to mitigate future discrepancies.