For Jennifer Young, a Senior Attorney on Geraci LLP’s Corporate & Securities team, the current regulatory landscape – and ongoing trends in real estate practices – offer a unique opportunity to hone her legal craft.
Before joining the team at Geraci, Young worked in PIMCO’s alternative investment division and at a venture capital firm in Silicon Valley. These experiences, she said, have taught her the importance of loving where she works and the projects she works on.
“I have seen so many people become miserable working in settings that do not reflect their abilities and beliefs. I have always been open to learning from those around me and soaking up that information and knowledge,” she said. “The importance of creating an equitable environment for all to succeed is not lost on me.”
Part of this equitable environment, Young said, includes making sure that women have a ‘seat at the table’ and are part of the decision-making process. As she was getting her start in law, Young added that she often saw instances of gender inequality in the legal and financial industries. Her retort to this? Become the best attorney she can while nurturing a gender-equitable environment where women can have a confident voice and be respected by their peers.
“What is most important to me is making sure I want to be at the table I’m sitting at,” she said. “What I mean by this is simple: making sure I’m inspired by those I’m sitting with, supporting and mentoring peers to develop their full potential, and fearlessly expressing viewpoints that not only serve my clients but also challenge the status quo, even if those ideas are unpopular or go against traditional norms. I am proud to be part of a team at Geraci where these different perspectives are heard and valued.”
While keeping that mindset at the forefront of equity-related conversations remains critical, Young also said she is closely watching the legal landscape on two different fronts – debt and real estate deal structures.
“Foreign investors and tax-exempt investors are two significant sources of capital for fund managers, and I’ve been seeing an increasing trend with fund managers carefully structuring their funds to afford these investors with tax efficient solutions. Tax-exempt investors want to minimize/eliminate unrelated business taxable income (UBTI), and foreign investors want to minimize/eliminate the realization of effectively connected income (ECI) and structure their investments in a manner that does not require them to file US income tax returns or be subject to withholding. As a result, the Master/Feeder Fund structure has become a growing trend. Properly structured, these Master/Feeder Fund structures operate to ‘block’ UBTI and ECI with minimal tax leakage. A Feeder Fund pools capital from offshore investors and feeds that capital into the Master Fund, which directs and oversees all investments held in the Master Fund portfolio. A separate US entity is established to facilitate the Feeder Fund’s investment into the Master Fund in a tax efficient manner, and usually includes the use of both debt and equity, which is often referred to as a ‘US Blocker Corporation.’
Additionally, fund managers are continuing to incorporate private, non-traded REITs to their debt fund structures as well, despite the potential elimination of the 20% pass-through deduction that may be sunsetting end of 2025 (unless extended by Congress). This is likely because other tax benefits available to REITs would remain unchanged: REITs block UBTI, block state withholdings, and reduce withholdings for offshore investors based on tax treaties.
In addition, Young said it is becoming increasingly common for lenders to lend in multiple states or expand into other states instead of just concentrating on lending in a single state.
“What we are continuing to see is private lenders desiring to expand their operations and offer multi-state lending. One of the most common questions I receive is which states require a license and what type of license will be required in those states. One of the most common misconceptions is that business purpose loans are exempt from licensing requirements in every state. While this may be true in certain states, the answer lies in the statutes and regulations of every individual state, and it requires a state-by-state analysis. What I aim to offer, and what my team provides, is a guiding hand throughout this process.”
The Corporate & Securities team at Geraci LLP specializes in real estate-focused private placements and other investments for private lenders, real estate developers, and entrepreneurs. The experienced team also establishes mortgage funds, real estate acquisition funds, and more. To learn more about everything Geraci LLP offers, visit geracilawfirm.com.
