How can REIT’s benefit from cost segregation studies?

1. Ta x R e d u c t ion E x p e r ts HOW CAN REIT’SBENEFIT From cost segregationstudies?

2. 01 INVESTORS! Cost segregation +REIT's= Federal taxsavings REITs can benefit from cost segregationstudies Misconceptions have left many REIT's believe their organisations are noteligible Equity REITs most commonly realize substantial benefits with a cost segregationstudy

3. 02 Cost segregation minimizes ordinary income tomaximize return of capital and/or capital gain relateddistributions It creates flexibility to achieve various dividendobjectives A cost segregation study can decrease a REIT’s operating income,allowing the REIT to distribute additional income as tax-free return on capital to high tax bracket shareholders or retain additional cash for investmentopportunities COST SEGREGATION AT AGLANCE A CSS can provide immediate reduction in ordinary income through increased depreciation in exchange for more Section 1231 capital gains in thefuture.

4. 03 DEPRECIATION STRATEGYIS KEYTO DIVIDEND RESULTS If a higher tax bracket shareholder is targeted, a cost segregation study enables a REIT to maximize return on capital. Thisminimizes the effective tax rate to theinvestor/shareholder. Relationships between dividend payout distributions across ordinary income versus capital gains versus return on capital are key for maximizing dividend yield and are often key in the growth of specific targeted investor groups.

5. HOW DOESO'CONNOR WORK WITHREITS? 04 We begin our analysis by determining the strategicrole as well as financial objectives, operating policies and experience of each of the three groups offunds: Privatefunds Funds registered with the SEC but not traded,and Funds publiclytraded We evaluate the REIT’s philosophy regarding growth via acquisition of new portfolios versus growthvia property or portfolio appreciation and the resulting gains. A REIT which has recently privatized or is positioningto dosoisanexcellentcandidateforIRScostsegregation.WeanalyzeaportfolioinadvanceofitbecomingaREIT.

6. 05 Our goal is to beupfront, We projectturnaround Our CSspecialists O’Connor &Associates honest and handleour client relationships with the utmostintegrity is 4-6 weeks.Under special circumstances, it can be as short as 10 businessdays! combine theright balance of tax, accounting, valuation and real estateexpertise without over-engineering what the IRSrequires is the industry leaderin “look back” studies having done more studies benefiting from Section 481a than any other boutique firm in thenation HOWDO WEDIFFER?

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