General Questions

When was Sterling Multifamily Trust founded?

Sterling MultifamilyTrust, formally known as Sterling Real Estate Trust and INREIT Real Estate Investment Trust was founded in November 2002 in Minot, North Dakota as a private real estate investment trust. Our initial stock price was $10.00 per share.

What is your company’s business focus?

Sterling Multifamily Trust owns a diversified portfolio of investment real estate with an emphasis on multifamily properties located in the upper and central Midwest.

Where are your properties located?

Most of our properties are located in North Dakota, which has demonstrated a strong and consistent economy. Sterling also owns property in Minnesota, Wisconsin, Michigan, Iowa, Nebraska, Arkansas, Mississippi, Texas, Colorado, Missouri and Louisiana.

Who are your tenants?

Our multifamily sector consists mostly of market-rate apartment communities in North Dakota, Minnesota and Nebraska. Our retail, medical, and office sector have tenants such as Walgreen’s, Applebee’s, Bio-life, a Division of Baxter International, Best Buy, Kohl’s, Aetna, and Wells Fargo. Many of these national tenants have signed long-term leases up to 25 years.

What makes Sterling Multifamily Trust an attractive REIT?

Sterling Multifamily Trust seeks to build upon its strong, consistent investment performance. Since inception in 2002, we have paid quarterly dividends to our shareholders, increasing these dividends annually.

What is the current dividend and when is it paid?

The current dividend (2018) is $1.01 per share annualized, which represents a dividend of 5.5 percent. Dividends are paid quarterly on the 15th day after the quarter-end based on current asking price. Shareholders of record on the last day of the quarter will receive the dividend. Sterling also offers a dividend reinvestment plan (DRP) in which eligible shareholders can elect to reinvest their dividends at 95% of the current asking price.

Can dividends be sent directly to a bank account?

Yes. To enroll, contact our Investor Relations department at (877) 269-1031, or complete and return the Direct Deposit Authorization form.

How do I invest in Sterling Multifamily Trust?

For more information on current offerings, please contact our Investor Relations Department at smftir@sretrust.com or call our transfer agent, Computershare, at (800) 368-5948.

Are there other investment opportunities with Sterling Multifamily Trust?

Yes. Sterling Multifamily Trust is actively seeking to acquire investment real estate in the upper Midwest. Our investment criteria are properties of $2,000,000 to $30,000,000 that exhibit a consistent history of stable performance.

If you are interested is discussing the sale of your property, please contact us at smftacquisitions@sretrust.com or call us at (701) 353-2720 or toll free at (877) 269-1031.

Who is your transfer agent and registrar?

Our transfer agent is Computershare.

What is a Medallion Signature Guarantee?

Over 6,000 brokerage firms and financial institutions belong to the Medallion Signature Guarantee Program. The application of a Medallion Signature Guarantee provides the authentication of the guarantor that the endorser of a certificate is the registered owner and has the legal authority to sign the certificate. The guarantor must know the endorser and stand behind its guarantee.

How Do I?

How can I receive news and information about Sterling Multifamily Trust?

You can sign up to receive future information about Sterling on our automated sign up included on our website. You can also request additional information directly from Sterling by contacting us at smftir@sretrust.com or by calling us at (701) 353-2720 or toll free at (877) 269-1031.

How can I find out more about real estate investment trusts?

You can find out additional information by following the link www.REIT.com, the public website of the National Association of Real Estate Investment Trusts, the trade organization for both public and private real estate investment trusts.

How do I report a change of address or provide dividend address information?

You may notify us of an address change by calling Investor Relations at (701) 353-2720 or toll free at (877) 269-1031. You can also contact the Investor Relations Department at our Transfer Agent, Computershare, toll free at (800) 368-5948. When calling, please have your Social Security Account Number (Tax Identification Number) available for account verification.

Additionally, you may request a change of address by enrolling in Computershare’s online investor portal, Investor Center.

How do I change the name (e.g. legal name change) on my shares?

With all ownership transfers, it is helpful to be clear with your instructions informing us how the transfer is to take place. Your instructions should state the complete name, address, and Tax ID (SSN) of the individual(s) or entities to whom the shares are to be transferred.

  • Complete a Transfer Request . We recommend using this form because it eliminates the complications associated with making errors. NOTE: A Medallion Signature Guarantee must be obtained for all signatures and affixed to the form and/or the certificate(s).
  • If your shares or units are held in stock certificate form, you must send us the outstanding stock certificates. If you are unable to locate all of your stock certificates, please notify us immediately.
  • When signing the transfer request, the endorsement should include the individual’s former name. Example: “Mary A. Doe now known as Mary A. Smith”
  • Any other owner whose name appears on the account or the face of the stock certificate(s) must also sign the transfer request and /or the back of the certificate(s).
  • If the existing account is enrolled in a Dividend Reinvestment Plan, you must communicate your intentions as to whether they will remain in the plan by completing our Dividend Reinvestment Form.
  • In the case of a divorce where only one party is willing to sign you must supply a court order authorizing the transfer of the stock without the signature of the other party. The court order should include instructions detailing the name of the individual to whom the stock will be transferred.
  • Send your original stock certificate(s) (if applicable) and transfer request to:Computershare
    PO Box 30170
    College Station, TX 77845

Important Note:
Whenever mailing stock certificates, we strongly recommend that you insure them for 1.5% of their current market value (minimum $35.00). This will cover the amount charged by most surety companies to obtain the surety bond required to replace the certificates should they be lost in transit.

How do I replace a lost or stolen certificate?

You may request a replacement for a lost or stolen stock certificate by calling our transfer agent’s Investor Relations Department at (800) 368-5948.

How can I obtain general information regarding my account information?

You may obtain general information regarding your account by calling Investor Relations at (701) 353-2720 or toll-free at (877) 269-1031. You may also contact our transfer agent at (800) 368-5948. Please have your Social Security Account Number (Tax Identification Number) available for account verification and the name of the security that you own. You can also receive account information by writing to us at:

Investor Relations
Sterling Multifamily Trust
c/o Computershare
PO Box 30170
College Station, TX 77845

Be sure to include the name of the company that you own shares in and any other information related to your question. Most correspondence will have a response mailed within five business days of receipt.

How do I sell or withdraw my shares or units?

To make a request to withdraw or sell your shares or units, please complete the Redemption Request and return it to:

Sterling Multifamily Trust
Investor Relations
1711 Gold Drive South, Suite 100
Fargo, ND 58103

All registered holders of the account must sign the request. You should refer to your plan prospectus for specific terms, conditions and costs related to such transactions or call us at (701) 353-2720 or toll-free at (877) 269-1031.

How can I get help with Investor Center?

Visit Investor Center help page for more information.

How will I know how many shares I own?

Computershare will periodically send statements showing how many shares are held in certificate and book-entry and how many shares are held in the Dividend Reinvestment Plan, if applicable.

How do I place my proxy vote?

You may submit your vote, prior to the meeting date, by mailing it to:

Computershare
PO Box 30170
College Station, TX 77845

Please remember, the last vote you submit will cancel out all previous votes you may have submitted. Always use the return envelope provided with your proxy card as it may list a designated PO Box to help expedite delivery.

How can I have errors on my 1099 changed?

A shareholder experiencing issues with a 1099 issued by Computershare should contact the Investor Relations Department at (800) 368-5948 and they’ll work in conjunction with the internal Taxation Department to resolve any issues. Please have your Social Security Account Number (Tax Identification Number) available for account verification and the name of the security that you own.

721 Questions

What is an UPREIT?

An UPREIT is an Umbrella Partnership Real Estate Investment Trust (UPREIT). This is a particular structure through which a REIT can hold its investments. In a typical UPREIT structure the REIT holds most of its assets through one Operating Partnership (OP). The REIT owns part of and generally controls the OP. The OP has minority limited partners as well (OP Unit Holders). The term UPREIT can also be used to describe a transaction utilizing section 721 of the Internal Revenue Code (IRC).

What is 721 UPREIT?

A 721 UPREIT under section 721 of the Internal Revenue Code (IRC, provides tax deferral benefits to property owners who contribute their property to a Real Estate Investment Trust (REIT). In exchange for the property contributed to the REIT, the investor receives units in the Operating Partnership (OP Units). The capital gain taxes remain deferred as long as the REIT holds the property and the investor holds the OP Units.

What is an Operating Partnership?

The Operating Partnership is the entity through which many REITs operate. In addition to allowing for additional flexibility in terms of operations, having the Operating Partnership allows property owners to contribute their properties to the Operating Partnership in exchange for partnership interests without triggering taxable capital gains. The Operating Partnership is controlled by its general partner, the REIT. The Operating Partnership owns the properties, either directly or through one or more subsidiaries. The Operating Partnership is also the entity which receives all income from the properties. The limited partners of the Operating Partnership (called “OP Unit Holders”) are individuals who contributed their properties in exchange for OP Units in the Operating Partnership.

What are Operating Partnership Units?

Limited partnership interests in the Operating Partnership are referred to as “OP Units.” OP Unitholders differ from shareholders, who own stock in the REIT, however, from an economic standpoint, OP Units are very similar to shares of stock in the REIT. OP Units are generally equal in value to shares of stock in the REIT, and they can fluctuate in value in the same way as REIT shares. OP Unit holders also generally receive distributions equal to the dividends paid on the REIT shares. OP Units are generally convertible on a one-for-one basis with shares of stock in the REIT. This conversion may be subject to several restrictions or an approval process by the REIT’s governing board. This conversion may also cause a taxable event for the Unitholder.

Are Operating Partnership Units the same as shares for tax purposes?

Although OP Units and REIT shares are generally the same from an economic standpoint, they are taxed differently for federal and state income tax purposes. An OP Unit Holder may be deemed to earn a portion of the total income of the Operating Partnership, including income from each of the states in which the OP transacts business. As a result, the OP Unit Holder may have income tax filing requirements in each of these states. REIT shares generate income that is taxable only in the shareholder’s state of residency and do not require additional state tax returns to be filed.

What are the benefits of a 721 UPREIT v. selling?

  • A Section 721 UPREIT is one of the few techniques available to postpone or potentially eliminate taxes due on the disposition of qualifying properties.
  • By deferring the tax, you have more equity available to exchange in Operating Partnership Units (OP units) in the REIT.
  • Any gain from depreciation recapture is postponed.
  • You can exchange a single property for an interest in a diversified investment portfolio of properties without paying tax on any gain.

What are the advantages for a 721 UPREIT to the REIT?

With a 721 UPREIT a REIT is able to acquire property generally without using substantial amounts of its own cash. By issuing OP Units in exchange for property a REIT acquires the benefits of the property ownership without using operating funds or having to obtain additional shareholder equity for the purchase.

What are the requirements for a valid 721 UPREIT?

  • Qualifying Property – Unlike a 1031 Exchange there are no property type requirements for an investor to contribute property to a REIT in a 721 UPREIT transaction. However, most REIT’s will require a property that is investment grade and fits the REIT’s overall investment strategy.
  • Entity Exchanging the Property – The entity that owns the property must be the entity that receives the Operating Partnership Units (OP Units) upon completion of the transaction. This is to say that if the property is owned by a legal entity, that entity will be the beneficiary of the 721 UPREIT and own the OP Units when the transaction is completed.

Can I have a cash out refinance of my property before a 721 UPREIT?

Maybe. There may be some restrictions for a cash out refinance before a property is UPREITed to a REIT through a 721 transaction.

Can Operating Partnership Units (OP Units) be converted to shares in the REIT?

In most cases yes but usually with some restrictions. Generally these restrictions are based on the amount of time the OP Units have been held. Usually OP Units can be converted to shares in the REIT after a specific holding period.

Are there tax consequences for converting Operating Partnership Units (OP Units) to shares of the REIT?

Generally yes. Converting OP Units into shares of the REIT is a taxable event where the taxable gain that was deferred by the 721 UPREIT would be payable along with depreciation recapture and any other deferred income.

Is a Qualified Intermediary (QI) needed for a 721 UPREIT?

No. A 721 UPREIT can be consummated without the use of a QI. An investor and willing REIT participant can implement the exchange without the use of a QI.

Is there any limit to the number of properties that can be 721 UPREITed?

No, there are no limits to the number or types of properties that can be UPREITed in a 721 transaction. An investor only needs to find a willing REIT to work with on the transaction. However a REIT may limit the number and type of property depending on the REIT’s investment strategy.

What are types of property that can transferred in a 721 UPREIT transaction?

Any real estate property is eligible for a 721 UPREIT. However an investor needs to find a REIT that invests in the type of property that the investor is looking to UPREIT. Many REITs focus on specific property types, such as multi-family housing or office complexes.

Are Section 721 UPREITs limited only to real estate?

Yes. 721 UPREITs do not include other types of property including machinery or equipment.

Are there time frames that govern a 721 UPREIT transaction?

No. Because there is no cash exchanged in a 721 UPREIT, only real estate and Operating Partnership Units (OP Units) there is no time frame for the transaction to be completed.

What are the general guidelines to follow in order for a taxpayer to defer all the taxable gain?

With a 721 UPREIT transaction a property owner cannot receive cash for the property that is exchanged. The investor can only receive Operating Partnership Units (OP Units) for the property.

Can the property being transferred in a 721 UPREIT transaction have a mortgage on it?

Yes. The property being transferred in a 721 UPREIT transaction can have a mortgage on it as long as the REIT that is accepting the property can assume the mortgage loan, or is paying the loan off with cash or a refinance loan.

Is Boot relevant to a 721 UPREIT transaction?

No. Because there is no cash, or other consideration, received in a 721 UPREIT (only OP UNITS) Boot is not relevant to a 721 UPREIT transaction.

I bought the property in an LLC and I would like to acquire the OP Units as an individual?

This is generally not possible. The entity that owns the property will be the entity that owns the OP Units after the 721 UPREIT is completed. This should be discussed with the CPA.

1031 Exchange Questions

What is a tax-deferred exchange?

In a typical transaction, the property owner is taxed on any gain realized from the sale. However, through a Section 1031 Exchange, the tax on the gain is deferred until some future date. Section 1031 of the Internal Revenue Code provides that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business, or for investment. A tax-deferred exchange is a method by which a property owner trades one or more relinquished properties for one or more replacement properties of “like-kind”, while deferring the payment of federal income taxes and some state taxes on the transaction. The theory behind Section 1031 is that when a property owner has reinvested the sale proceeds into another property, the economic gain has not been realized in a way that generates funds to pay any tax. In other words, the taxpayer’s investment is still the same, only the form has changed (e.g. vacant land exchanged for apartment building). Therefore, it would be unfair to force the taxpayer to pay tax on a “paper” gain. The like-kind exchange under Section 1031 is tax-deferred, not tax-free. When the replacement property is ultimately sold (not as part of another exchange), the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax.

What are the benefits of exchanging v. selling?

  • A Section 1031 exchange is one of the few techniques available to postpone or potentially eliminate taxes due on the sale of qualifying properties.
  • By deferring the tax, you have more money available to invest in another property. In effect, you receive an interest free loan from the federal government, in the amount you would have paid in taxes.
  • Any gain from depreciation recapture is postponed.
  • You can acquire and dispose of properties to reallocate your investment portfolio without paying tax on any gain.

What are the different types of exchanges?

  • Simultaneous Exchange: The exchange of the relinquished property for the replacement property occurs at the same time.
  • Delayed Exchange: This is the most common type of exchange. A Delayed Exchange occurs when there is a time gap between the transfer of the Relinquished Property and the acquisition of the Replacement Property. A Delayed Exchange is subject to strict time limits, which are set forth in the Treasury Regulations.
  • Build-to-Suit (Improvement or Construction) Exchange: This technique allows the taxpayer to build on, or make improvements to, the replacement property, using the exchange proceeds.
  • Reverse Exchange: A situation where the replacement property is acquired prior to transferring the relinquished property. The IRS has offered a safe harbor for reverse exchanges, as outlined in Rev. Proc. 2000-37, effective September 15, 2000. These transactions are sometimes referred to as “parking arrangements” and may also be structured in ways which are outside the safe harbor.
  • Personal Property Exchange: Exchanges are not limited to real property. Personal property can also be exchanged for other personal property of like-kind or like-class.

What are the requirements for a valid exchange?

  • Qualifying Property – Certain types of property are specifically excluded from Section 1031 treatment: property held primarily for sale; inventories; stocks, bonds or notes; other securities or evidences of indebtedness; interests in a partnership; certificates of trusts or beneficial interest; and choses in action. In general, if property is not specifically excluded, it can qualify for tax-deferred treatment.
  • Proper Purpose – Both the relinquished property and replacement property must be held for productive use in a trade or business or for investment. Property acquired for immediate resale will not qualify. The taxpayer’s personal residence will not qualify.
  • Like Kind – Replacement property acquired in an exchange must be “like-kind” to the property being relinquished. All qualifying real property located in the United States is like-kind. Personal property that is relinquished must be either like-kind or like-class to the personal property which is acquired. Property located outside the United States is not like-kind to property located in the United States.
  • Exchange Requirement – The relinquished property must be exchanged for other property, rather than sold for cash and using the proceeds to buy the replacement property. Most deferred exchanges are facilitated by Qualified Intermediaries, who assist the taxpayer in meeting the requirements of Section 1031.

When can I take money out of the exchange account?

Once the money is deposited into an exchange account, funds can only be withdrawn in accordance with the Regulations. The taxpayer cannot receive any money until the exchange is complete. If you want to receive a portion of the proceeds in cash, this must be done before the funds are deposited with the Qualified Intermediary.

Can the replacement property eventually be converted to the taxpayer's primary residence or a vacation home?

Yes, but the holding requirements of Section 1031 must be met prior to changing the primary use of the property. The IRS has no specific regulations on holding periods. However, many experts feel that to be on the safe side, the taxpayer should hold the replacement property for a proper use for a period of at least one year.

If the owner later on wants to take advantage of the home owner’s exemption (up to $250,000 or $500,000 for a couple), there is now a five year holding period requirement.

What is a Qualified Intermediary (QI)?

A Qualified Intermediary is an independent party who facilitates tax-deferred exchanges pursuant to Section 1031 of the Internal Revenue Code. The QI cannot be the taxpayer or a disqualified person.

  • Acting under a written agreement with the taxpayer, the QI acquires the relinquished property and transfers it to the buyer.
  • The QI holds the sales proceeds, to prevent the taxpayer from having actual or constructive receipt of the funds.
  • Finally, the QI acquires the replacement property and transfers it to the taxpayer to complete the exchange within the appropriate time limits.

Why is a Qualified Intermediary needed?

The exchange ends the moment the taxpayer has actual or constructive receipt (i.e. direct or indirect use or control) of the proceeds from the sale of the relinquished property. The use of a QI is a safe harbor established by the Treasury Regulations. If the taxpayer meets the requirements of this safe harbor, the IRS will not consider the taxpayer to be in receipt of the funds. The sale proceeds go directly to the QI, who holds them until they are needed to acquire the replacement property. The QI then delivers the funds directly to the closing agent.

Can the taxpayer just sell the relinquished property and put the money in a separate bank account, only to be used for the purchase of the replacement property?

The IRS regulations are very clear. The taxpayer may not receive the proceeds or take constructive receipt of the funds in any way, without disqualifying the exchange.

If the taxpayer has already signed a contract to sell the relinquished property, is it too late to start a tax-deferred exchange?

No, as long as the taxpayer has not transferred title, or the benefits and burdens of the relinquished property, she can still set up a tax-deferred Exchange. Once the closing occurs, it is too late to take advantage of a Section 1031 tax-deferred exchange (even if the taxpayer has not cashed the proceeds check).

Does the Qualified Intermediary actually take title to the properties?

No, not in most situations. The IRS regulations allow the properties to be deeded directly between the parties, just as in a normal sale transaction. The taxpayer’s interests in the property purchase and sale contracts are assigned to the QI. The QI then instructs the property owner to deed the property directly to the appropriate party (for the relinquished property, its buyer; for the replacement property, taxpayer).

Does the What are the time restrictions on completing a Section 1031 exchange?

A taxpayer has 45 days after the date that the relinquished property is transferred to properly identify potential replacement properties. The exchange must be completed by the date that is 180 days after the transfer of the relinquished property, or the due date of the taxpayer’s federal tax return for the year in which the relinquished property was transferred, whichever is earlier. Thus, for a calendar year taxpayer, the exchange period may be cut short for any exchange that begins after October 17th. However, the taxpayer can get the full 180 days, by obtaining an extension of the due date for filing the tax return.

What if the taxpayer cannot identify any replacement property within 45 days, or close on a replacement property before the end of the exchange period?

Unfortunately, there are no extensions available. If the taxpayer does not meet the time limits, the exchange will fail and the taxpayer will have to pay any taxes arising from the sale of the relinquished property, unless the IRS has expressly granted extensions in specified disaster area(s).

How does a reverse exchange work?

In a typical reverse (or “parking”) exchange, the “Exchange Accommodation Titleholder” (EAT) takes title to (“parks”) the replacement property and holds it until the taxpayer is able to sell the relinquished property. The taxpayer then exchanges with the EAT, who now owns the replacement property. An exchange structured within the safe harbor of Rev. Proc. 2000-37 cannot have a parking period that goes beyond 180 days.

Is there any limit to the number of properties that can be identified?

There are three rules that limit the number of properties that can be identified. The taxpayer must meet the requirements of at least one of these rules:

  • 3-Property Rule: The taxpayer may identify up to 3 potential replacement properties, without regard to their value; or
  • 200% Rule: Any number of properties may be identified, but their total value cannot exceed twice the value of the relinquished property, or
  • 95% Rule: The taxpayer may identify as many properties as he wants, but before the end of the exchange period the taxpayer must acquire replacement properties with an aggregate fair market value equal to at least 95% of the aggregate fair market value of all the identified properties.

What are the requirements to properly identify replacement property?

Potential replacement property must be identified in a writing, signed by the taxpayer, and delivered to a party to the exchange who is not considered a “disqualified person”. A “disqualified” person is any one who has a relationship with the taxpayer that is so close that the person is presumed to be under the control of the taxpayer. Examples include blood relatives, and any person who is or has been the taxpayer’s attorney, accountant, investment banker or real estate agent within the two years prior to the closing of the relinquished property. The identification cannot be made orally.

Are Section 1031 Exchanges limited only to real estate?

No. Any property that is held for productive use in a trade or business, or for investment, may qualify for tax-deferred treatment under Section 1031. In fact, many exchanges are “multi-asset” exchanges, involving both real property and personal property.

What is a reverse exchange?

A reverse exchange, sometimes called a “parking arrangement,” occurs when a taxpayer acquires a Replacement Property before disposing of their Relinquished Property. A “pure” reverse exchange, where the taxpayer owns both the Relinquished and Replacement properties at the same time, is not allowed. The actual acquisition of the “parked” property is done by an Exchange Accommodation Titleholder (EAT) or parking entity.

Is a reverse exchange permissible?

Yes. Although the Treasury Regulations still do not apply to reverse exchanges, the IRS issued “safe harbor” guidelines for reverse exchanges on September 15th, 2000, in Revenue Procedure 2000-37. Compliance with the safe harbor creates certain presumptions that will enable the transaction to qualify for Section 1031 tax-deferred exchange treatment.

How does a reverse exchange work?

In a typical reverse (or “parking”) exchange, the “Exchange Accommodation Titleholder” (EAT) takes title to (“parks”) the replacement property and holds it until the taxpayer is able to sell the relinquished property. The taxpayer then exchanges with the EAT, who now owns the replacement property. An exchange structured within the safe harbor of Rev. Proc. 2000-37 cannot have a parking period that goes beyond 180 days.

What happens if the exchange cannot be completed within 180 days?

If the reverse exchange period exceeds 180 days, then the exchange is outside the safe harbor of Rev. Proc. 2000-37. With careful planning, it is possible to structure a reverse exchange that will go beyond 180 days, but the taxpayer will lose the presumptions that accompany compliance with the safe harbor.

What is the difference between realized gain and recognized gain?

Realized gain is the increase in the taxpayer’s economic position as a result of the exchange. In a sale, tax is paid on the realized gain. Recognized gain is the taxable gain. Recognized gain is the lesser of realized gain or the net boot received.

What is Boot?

Boot is any property received by the taxpayer in the exchange which is not like-kind to the relinquished property. Boot is characterized as either “cash” boot or “mortgage” boot. Realized Gain is recognized to the extent of net boot received.

What is Mortgage Boot?

Mortgage Boot consists of liabilities assumed or given up by the taxpayer. The taxpayer pays mortgage boot when he assumes or places debt on the replacement property. The taxpayer receives mortgage boot when he is relieved of debt on the replacement property. If the taxpayer does not acquire debt that is equal to or greater than the debt that was paid off, they are considered to be relieved of debt. The debt relief portion is taxable, unless offset when netted against other boot in the transaction.

What is Cash Boot?

Cash Boot is any boot received by the taxpayer, other than mortgage boot. Cash boot may be in the form of money or other property.

What are the boot netting rules?

  • Cash boot paid offsets cash boot received
  • Cash boot paid offsets mortgage boot received (debt relief)
  • Mortgage boot paid (debt assumed) offsets mortgage boot received
  • Mortgage boot paid does not offset cash boot received

I bought the property as a single person and I would like to acquire the replacement property together with my spouse?

The most conservative way is to stay consistent and complete the exchange the same way it was started and to add the spouse after the completion of the exchange. An exception can be made if there is a lender requirement that the spouse has to be added in order to qualify for a loan. If an exchange is planned well ahead of time, another solution would be to add the spouse to the title of the currently held property. Timing should be discussed with the CPA.

I closed escrow on my first replacement property within the 45 day identification period. Can I now identify three more properties within my 45 day identification period?

If you are using the three property rule, the completed acquisition counts as one and you may identify only up to two additional properties.

How do I identify two different properties (or percentages of ownership through a TIC) covered by ONE purchase contract?

If the properties could be sold separately at a later date, they should be identified as two properties.

Proxy Questions

Why have I received a proxy statement asking for my vote?

You were sent proxy material because you own shares in Sterling and have a right to vote on important proposals concerning your investment. We encourage all shareholders to vote their proxy. The identity and vote of a stockholder remains confidential except as required by law.

What is a shareholder of record?

The shareholder of record is a person or entity owning shares in a company as of a particular Record Date. In this case the record date is the latest date by which you must be a shareholder, in order to vote at the annual meeting.

A registered shareholder or record owner is a shareholder whose share ownership in a company is recorded directly on the books of the company’s transfer agent. If you own company shares through a bank, broker or other intermediary, then you are the beneficial shareholder. Your holdings are considered to be held in “street name” through your bank, broker or other intermediary.

May I submit my vote in person at the Shareholder meeting?

Yes. However, we encourage you to submit your vote by proxy card even if you are attending the meeting. All attendees must bring two (2) forms of identification and, if necessary, their proxy card for admission to the meeting.

May I change or revoke my proxy vote?

Yes. You may change or revoke your proxy vote at any time prior to the meeting. Your last vote submitted prior to the meeting will be recorded and will replace all previous votes.

Transfer Questions

How do I transfer shares from a custodian to a minor who is not of age?

With all ownership transfers, it is helpful to be clear with your instructions informing us how the transfer is to take place. Your instructions should state the complete name, address, and Tax ID (SSN) of the individual(s) or entities to whom the shares are to be transferred.

Example
From: Mark B. Arrow Custodian John F. Arrow [state abbr] UNIF GIFT MIN ACT
To: John F. Arrow

  • Complete a ​Transfer Request. We recommend using these forms because it eliminates the complications associated with making errors. NOTE: A Medallion Signature Guarantee must be obtained for all signatures and affixed to the form and/or the certificate(s).
  • If your shares or units are held in stock certificate form, you must send us the outstanding stock certificates. If you are unable to locate all of your stock certificates, please notify us immediately.
  • If the existing account is enrolled in a Dividend Reinvestment Plan, you must communicate your intentions as to whether they will remain in the plan by completing our Dividend Reinvestment Form.
  • We also require an original birth certificate, a certified copy of the original birth certificate, or a copy with a medallion signature guarantee affixed.
  • Send your original stock certificate(s) (if applicable), transfer request and related documents to:

Computershare
PO Box 30170
College Station, TX 77845

Important Note: Whenever mailing stock certificates, we strongly recommend that you insure them for 1.5% of their current market value (minimum $35.00). This will cover the amount charged by most surety companies to obtain the surety bond required to replace the certificates should they be lost in transit.

How do I transfer my shares into a trust registration?

With all ownership transfers, it is helpful to be clear with your instructions informing us how the transfer is to take place. Your instructions should state the complete name, address, and Tax ID (SSN) of the individual(s) or entities to whom the shares are to be transferred.

Example
From: Jacob A. Jackson
To: Jacob A. Jackson TTEE Jacob A. Jackson Trust U/A Dated 1/1/2000

  • Complete a Transfer Request . We recommend using these forms because it eliminates complications associated with making errors. NOTE: A Medallion Signature Guarantee must be obtained for all signatures and affixed to the form and/or the certificate(s).
  • If your shares or units are held in stock certificate form, you must send us the outstanding stock certificates. If you are unable to locate all of your stock certificates, please notify us immediately.
  • All owners whose name appears on the account or the face of the stock certificate(s) must sign the transfer request and/or back of the certificate(s).
  • If the new account wishes to participate in the Dividend Reinvestment Plan, you must complete the Dividend Reinvestment Form.
  • Send your original stock certificate(s) (if applicable) and transfer request to:

Computershare
PO Box 30170
College Station, TX 77845

Important Note:
Whenever mailing certificates, we strongly recommend that you insure them for 1.5% of their current market value (minimum $35.00). This will cover the amount charged by most surety companies to obtain the surety bond required to replace the certificates should they be lost in transit.

How do I transfer shares from a deceased individual?

With all ownership transfers, it is helpful to be clear with your instructions informing us how the transfer is to take place. Your instructions should state the complete name, address, and Tax ID (SSN) of the individual(s) or entities to whom the shares are to be transferred.

Transfer To Estate
From: John A. Doe
To: Jane B. Doe Executrix for the Estate of John A. Doe
– or –
To: (heir) Jane B. Doe

  • Complete a Transfer Request.  We recommend using these forms because it eliminates complications associated with making errors. NOTE: A Medallion Signature Guarantee must be obtained for all signatures and affixed to the form and/or the certificate(s).
  • If your shares or units are held in stock certificate form,you must send us the outstanding stock certificates. If you are unable to locate all of your stock certificates, please notify us immediately.
  • A certified copy of the court appointment of estate representative dated within 60 days of the transfer request. This document is obtained when the estate is probated.
  • Also required is an Affidavit of Domicile for the deceased shareholder properly executed and notarized. This document will confirm the state of residence at the time of death for tax purposes.
  • If the existing account is enrolled in the Dividend Reinvestment Plan, you must communicate your intentions as to whether they will remain in the plan by completing our Dividend Reinvestment Form.
  • An Inheritance Tax Waiver (consent to transfer) from the state where the deceased shareholder lived may also be required if the company is incorporated and the beneficiary resides in one of the following states:An Inheritance Tax Waiver (consent to transfer) from the state where the deceased shareholder lived may also be required if the company is incorporated and the beneficiary resides in one of the following states:State Exceptions
    • Arizona Required if decedent was a legal resident of Arizona and stock is a corporation incorporated in Arizona.
    • California Required if decedent was a legal resident of California and died on or before 6/9/82.
    • Hawaii Required if decedent was a legal resident of Hawaii and died before 7/1/83 and stock is of a corporation incorporated in Hawaii.
    • Illinois Required if decedent was a legal resident of Illinois and died before 1/1/83.
    • Indiana Required if decedent was a legal resident of Indiana for all corporations. No waiver or consent to transfer is required if the stock is being transferred to the surviving spouse.
    • Iowa Required if decedent was a legal resident of Iowa and the estate was not probated and the stock is of a corporation in Iowa.
    • Louisiana Required if decedent was a legal resident of Louisiana and stock is of a corporation incorporated in Louisiana. However if probate or court order states that tax has been paid, no consent or inheritance tax waiver is required.
    • Montana Required for all corporations if decedent was a legal resident of Montana.
    • New Hampshire Required if decedent was a legal resident of New Hampshire and the stock is of a corporation incorporated in New Hampshire.
    • New Jersey An inheritance tax waiver is required if the decedent was a legal resident of new jersey and stock is of a corporation incorporated in New Jersey. However an affidavit of waiver should be used in the following situations: *When the transfer is to the surviving spouse and death occurred after 7/1/87 and *When transfer is to a beneficiary who is a kin and death occurred after 7/1/88.
    • New York If the decedent was a legal resident of New York who died before 7/1/78 and the current market value of the shares is $2,000 or more, a tax waiver is required for all corporations. A tax waiver is required if the decedent died after 7/1/78 and the current market value of the shares is $30,000 or more. However, a tax waiver is not required if the shares are registered in joint tenancy with the husband and wife and the shares are being transferred to a surviving spouse.
    • Ohio If decedent was a legal resident of Ohio and the current market value of the shares is $25,000 or more, a tax waiver is required for all corporations. However if stock is being transferred to the surviving spouse, no waiver or consent to transfer is required.
    • Oklahoma If decedent was a legal resident of Oklahoma, a tax waiver is required for all corporations. However no waiver is required for any property passing to the surviving spouse either through the estate of the decedent or by joint tenancy.
    • Oregon Required if decedent was a legal resident of Oregon and died on or before 1/1/87.
    • Puerto Rico Required if decedent was a legal resident of Puerto Rico for all corporations.
    • South Dakota If decedent was a legal resident of South Dakota, a tax waiver is required for all corporations. However no waiver is required if death occurred after 7/4/83 and stock is held in joint tenancy between husband and wife and is being transferred to the surviving spouse.
    • Tennessee If decedent was a legal resident of Tennessee, A tax waiver is required for all corporations. However no tax waiver or consent is required for property passing to the surviving spouse, tenant by entirety, or joint tenant.
    • Utah Required if decedent was a legal resident of Utah and died before 1/1/77.
    • Washington Required if decedent was a legal resident of Washington and died before 1/1/82.
    • West Virginia Required if decedent was a legal resident of West Virginia and died before 7/1/85.
    • Wisconsin Required if decedent was a legal resident of Wisconsin and died on or before 1/2/92.
  • Send to us your original stock certificate(s), Request to Transfer Stock Form, and Inheritance Tax Waiver, if applicable, properly completed and executed.

Important Note:
Whenever mailing certificates, we strongly recommend that you insure them for 1.5% of their current market value (minimum $35.00). This will cover the amount charged by most surety companies to obtain the surety bond required to replace the certificates should they be lost in transit.

How do I transfer shares from a deceased joint tenant to the surviving tenant?

With all ownership transfers, it is helpful to be clear with your instructions informing us how the transfer is to take place. Your instructions should state the complete name, address, and Tax ID (SSN) of the individual(s) or entities to whom the shares are to be transferred.

Example
From: James B. Smith (deceased) & Joan A. Smith JT TEN
To: Joan A. Smith

  • Complete a Transfer Request.  We recommend using these forms because it eliminates complications associated with making errors. NOTE: All surviving tenants must sign the Request to Transfer Stock form and A Medallion Signature Guarantee must be obtained for all signatures and affixed to the form and/or the certificate(s).
  • If your shares or units are held in stock certificate form, you must send us the outstanding stock certificate(s). If you are unable to locate all of your stock certificates, please notify us immediately.
  • The Guarantor will require an Affidavit of Domicile for the deceased shareholder properly executed and notarized. This document will confirm the state of residence at the time of death for tax purposes.
  • The Guarantor will also require a certified copy of the death certificate of the deceased owner.
  • If the existing account is enrolled in a Dividend Reinvestment Plan, you must communicate your intentions as to whether they will remain in the plan by completing our Dividend Reinvestment Form.
  • An Inheritance Tax Waiver (consent to transfer) from the state where the deceased shareholder lived may also be required if the company is incorporated and the beneficiary resides in one of the following states:An Inheritance Tax Waiver (consent to transfer) from the state where the deceased shareholder lived may also be required if the company is incorporated and the beneficiary resides in one of the following states:State Exceptions
    • Arizona Required if decedent was a legal resident of Arizona and stock is a corporation incorporated in Arizona.
    • California Required if decedent was a legal resident of California and died on or before 6/9/82.
    • Hawaii Required if decedent was a legal resident of Hawaii and died before 7/1/83 and stock is of a corporation incorporated in Hawaii.
    • Illinois Required if decedent was a legal resident of Illinois and died before 1/1/83.
    • Indiana Required if decedent was a legal resident of Indiana for all corporations. No waiver or consent to transfer is required if the stock is being transferred to the surviving spouse.
    • Iowa Required if decedent was a legal resident of Iowa and the estate was not probated and the stock is of a corporation in Iowa.
    • Louisiana Required if decedent was a legal resident of Louisiana and stock is of a corporation incorporated in Louisiana. However if probate or court order states that tax has been paid, no consent or inheritance tax waiver is required.
    • Montana Required for all corporations if decedent was a legal resident of Montana.
    • New Hampshire Required if decedent was a legal resident of New Hampshire and the stock is of a corporation incorporated in New Hampshire.
    • New Jersey An inheritance tax waiver is required if the decedent was a legal resident of new jersey and stock is of a corporation incorporated in New Jersey. However an affidavit of waiver should be used in the following situations: *When the transfer is to the surviving spouse and death occurred after 7/1/87 and *When transfer is to a beneficiary who is a kin and death occurred after 7/1/88.
    • New York If the decedent was a legal resident of New York who died before 7/1/78 and the current market value of the shares is $2,000 or more, a tax waiver is required for all corporations. A tax waiver is required if the decedent died after 7/1/78 and the current market value of the shares is $30,000 or more. However, a tax waiver is not required if the shares are registered in joint tenancy with the husband and wife and the shares are being transferred to a surviving spouse.
    • Ohio If decedent was a legal resident of Ohio and the current market value of the shares is $25,000 or more, a tax waiver is required for all corporations. However if stock is being transferred to the surviving spouse, no waiver or consent to transfer is required.
    • Oklahoma If decedent was a legal resident of Oklahoma, a tax waiver is required for all corporations. However no waiver is required for any property passing to the surviving spouse either through the estate of the decedent or by joint tenancy.
    • Oregon Required if decedent was a legal resident of Oregon and died on or before 1/1/87.
    • Puerto Rico Required if decedent was a legal resident of Puerto Rico for all corporations.
    • South Dakota If decedent was a legal resident of South Dakota, a tax waiver is required for all corporations. However no waiver is required if death occurred after 7/4/83 and stock is held in joint tenancy between husband and wife and is being transferred to the surviving spouse.
    • Tennessee If decedent was a legal resident of Tennessee, A tax waiver is required for all corporations. However no tax waiver or consent is required for property passing to the surviving spouse, tenant by entirety, or joint tenant.
    • Utah Required if decedent was a legal resident of Utah and died before 1/1/77.
    • Washington Required if decedent was a legal resident of Washington and died before 1/1/82.
    • West Virginia Required if decedent was a legal resident of West Virginia and died before 7/1/85.
    • Wisconsin Required if decedent was a legal resident of Wisconsin and died on or before 1/2/92.
  • Send your original stock certificate(s) (if applicable), transfer request and related documents to:

Computershare
PO Box 30170
College Station, TX 77845

Is there a fee to transfer shares?

There is no fee to process a share or unit transfer through Computershare.

Tax Questions

When is tax information provided to shareholders?

1099’s are mailed to all shareholders by January 31st and K-1’s are mailed to all limited partners by April 1st.

What is a 1099-DIV?

A 1099-DIV reports income paid to you from dividends on amounts of $10.00 or more.

Contact Us

Have more questions about investment property, REITs, or other topics? Let us know, and we’ll work to provide you with answers.