January 2020, Vol. 247, No. 1

Legal Perspectives

Midstream Energy REITs: A New Structure

By G. Michael O’Leary and Thomas W. Ford, Jr., Partners, Hunton Andrews Kurth, Houston A recent IRS private ruling allows a real estate investment trust or “REIT” to own and operate traditional midstream infrastructure assets, including storage assets and pipelines, and derive REIT qualifying income from traditional commercial arrangements with customers. If structured correctly, the REIT’s income from these assets and arrangements is treated as “rents from real property,” an important aspect of qualifying for REIT status under the Internal Revenue Code (IRS). While there are many advantages to structuring a midstream business as a REIT, it is important to note that a midstream energy

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