Both approaches create potential pitfalls for hotel operators. In both approaches, the “owner” party of the hotel management is actually the TRS, whose only fortune is usually its rental participation in the hotel. The most pessimistic scenario for the hotel operator: the owner terminates his lease with TRS and leaves the hotelier a hotel management contract with a party who is no longer interested in the hotel and a right to compensation against a company without wealth. The fee schedule for marketing, property tax and project management services was also presented in the ESR-Reit filing on Monday. The legal structure used by REITs (and some other tax-exempt investors) to hold hotel assets differs from the more traditional structure in which the hotel fee holder entered into the hotel management contract with the operator. For complex tax reasons beyond the scope of this article, REITs create so-called “REIT” (or TRS) companies that rent the hotel (and associated assets) of the REIT (or “lessor”) and are the counterparties of the hotel management contract with the hotel operator. This result is usually achieved in two ways. The hotelier must ensure that their hotel management contracts prefigure a rental structure and contain appropriate protective measures to avoid the worst-case scenario. In the case of a lease agreement with companies and related parties, hotel management contracts should require what is known as a “no-inconvenience lessor” agreement. The owner`s no-disturbance agreement should cover the following points: This study examines why external consulting real estate investment trusts (REITs) lag behind their internally managed counterparts.
In line with previous studies, we find that REITs managed by external consultants are more than 7% behind REITs managed internally. Cash flow returns at the real estate level are similar between the two forms of management; However, company-level charges, and in particular interest charges, are responsible for the decrease in shareholder liquidity (FFO) in external REITs. . . .