GP Company is conceived by Johnson Bridges and Jeffrey Arnold (the “Founders”), both who are residents of Austin, Texas. They both recently graduated from the University of Texas in Austin, earning degrees in Business Administration with a minor in Real Estate. Although the company is still in the conception stage, the Founders realize that they should organize some form of business entity to carry on business successfully. One of their goals is to use their real estate skills to earn profits quickly, so they can experience “the good life.” John Kismet is a friend who graduated from UT School of Law and passed the bar exam. He agrees to be the company’s legal initial advisor and immediately recommends they consider forming either a C corporation or an S corporation for the business and to focus on commercial real estate instead of residential real estate. He also suggests that forming a real estate investment trust could attract investors who want a return on their investment without actually owning the real estate properties themselves. You’ve been hired as additional outside counsel to advise the Founders during each step of the company’s formation and operation. As the new legal advisor, how do you respond to the following questions, so it will benefit your client, GP Company? 

(a)  What is the difference between a GP REIT equity trust and a GP REIT mortgage trust? What can create a conflict of interest in the sale of mortgage REITs? Currently, which of the REITs is more popular with investors – the equity trust or mortgage trust?

(b) Which of the equity REITs specializes in senior housing? In gas transmission? In single-family rental housing? What expenses are associated with the mortgage REIT? How are most REIT dividends taxed? What act of the U.S. Congress created the real estate investment trust?