GOODWIN 49 or become tenants should self-monitor their relevant ownership percentages to ensure the related-party tenant ownership limit is not breached. If a fund or mutual fund were to acquire a 10% or greater interest in both the REIT and one of the REIT’s current or prospective tenants — not a remote possibility in today’s world of enormous collective investment funds — then the waiver will immediately terminate and the ownership limit in the REIT’s charter will kick in and automatically transfer that portion of the fund’s REIT shares in excess of 9.8% to a charitable trust, as described above. For this reason, the related party tenant ownership limitations may be perceived as having anti-takeover effect, even if a strict 5/50 ownership limit would not.33 7. CONCLUSION Not all ownership limits are created equal. REITs considering a waiver request from the ownership limitation provisions in their charter must first carefully review the relevant provisions in the charter and then equally carefully apply to them the specific facts and circumstances at hand. Some provisions in the charter ownership limitations may be waivable by the board of directors under certain circumstances, while other provisions that work to protect the company’s ongoing qualification as a REIT are never waivable. Determining whether a waiver is warranted and, if so, the scope and terms of the waiver, requires careful analysis by the board, with the assistance of counsel. 33 See discussion accompanying footnote 24. YOEL KRANZ Partner +1 212 813 8831 GIL MENNA Partner +1 617 570 1433 REIT CAPITAL MARKETS CONTACT THE AUTHORS EDWARD L. GLAZER Partner +1 617 570 1170 NEAL SANDFORD Partner +1 617 570 1632 ERIC C. WILLENBACHER Partner +1 212 813 8942 REIT TAXATION IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.