Effective Federal Tax Rates on REIT Dividends Reduced
December 26 2017 - 8:30AM
Business Wire
Global Medical REIT Inc. Issues Statement
Regarding Impact of Recent Tax Legislation on REIT
Dividends
Global Medical REIT Inc. (NYSE:GMRE) (the “Company”), a Maryland
corporation engaged primarily in the acquisition of licensed,
state-of-the-art, purpose-built healthcare facilities and the
leasing of these facilities to strong clinical operators with
leading market share, is providing the following information
regarding the impact of the recently-enacted Tax Cuts and Jobs Act
(the “TCJA”) on REIT dividends in response to investor inquiries.
Key provisions of the legislation pertaining to REIT dividends
include:
- Beginning in 2018, individual
shareholders will receive a deduction equal to 20% of REIT
dividends received (resulting in a maximum 29.6% effective federal
income tax rate on ordinary REIT dividends for individual taxpayers
in the top 37.0% tax bracket).
- Under the law in effect for 2017 and
prior years, the maximum effective federal income tax rate on
ordinary REIT dividends was 39.6%.
- As under prior law, REIT dividends may,
if an investor’s income exceeds certain thresholds, be subject to
the 3.8% Medicare tax.
- With respect to portions of REIT
distributions that do not constitute dividends (and are instead a
return of capital, reducing a shareholder’s tax basis in its shares
but not resulting in income or gain except to the extent tax basis
is exhausted) there has been no change under the TCJA.
- The above deduction is applicable to
ordinary REIT dividends, as opposed to distributions of capital
gain or qualified dividends (i.e., dividends attributable to
dividends received by a REIT from C-Corporations, such as taxable
REIT subsidiaries), which are already taxed at preferential maximum
20% rates.
- The deduction for ordinary REIT
dividends under the TCJA is not subject to the wage/unadjusted tax
basis limits that are applicable to other types of pass-through
income.
“We have received inquiries from our investors regarding the new
tax legislation and want to share our understanding of the likely
impact on the taxation of our distributions. Our most recent
quarterly distribution of $0.20 per share equates to a current
annualized yield of approximately 9.7%, based on the closing price
of our common stock on December 22, 2017 of $8.28 per share. This
9.7% annualized yield equates to an after-tax annualized yield of
approximately 6.8% for investors in the top 37.0% tax bracket
(assuming 100% of our distributions are taxed as dividends) versus
approximately 5.8% prior to the enactment of the TCJA. We are
pleased this legislation includes provisions to help maintain the
benefits of REIT dividends vis-a-vie regular corporate dividends,”
said CEO Jeffrey Busch.
The yields stated above are for illustrative purposes only based
on an annualized yield calculated by multiplying our current fourth
quarter distribution of $0.20 per share by four. The statements
above should not be construed as tax advice or guarantees of our
actual future annual yields. The analysis above also assumes that
100% of our distributions will be taxable as dividends. The actual
tax profile of our distributions will depend on whether such
distributions are classified as dividends or return of capital.
Additionally, our actual future annual yield may be lower based on
factors such as our future distribution rate and stock price.
About Global Medical REIT Inc.
Global Medical REIT Inc. is a Maryland corporation engaged
primarily in the acquisition of licensed, state-of-the-art,
purpose-built healthcare facilities and the leasing of these
facilities to strong clinical operators with leading market share.
The Company intends to produce increasing, reliable rental revenue
by expanding its portfolio, and leasing each of its healthcare
facilities to market-leading operators under a long-term,
triple-net lease. The Company’s management team has significant
healthcare, real estate and public real estate investment trust, or
REIT, experience and has long-established relationships with a wide
range of healthcare providers.
Forward-Looking Statements
This press release contains statements that are “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as
“anticipate”, “believe”, “expect”, “estimate”, “plan”, “outlook”,
and “project” and other similar expressions that predict or
indicate future events or trends or that are not statements of
historical matters. Forward-looking statements should not be read
as a guarantee of future performance or results, and will not
necessarily be accurate indications of the times at, or by, which
such performance or results will be achieved. Forward-looking
statements are based on information available at the time those
statements are made and/or management’s good faith belief as of
that time with respect to future events. These forward-looking
statements are subject to various risks and uncertainties, not all
of which are known to the Company and many of which are beyond the
Company’s control, which could cause actual performance or results
to differ materially from those expressed in or suggested by the
forward-looking statements. These risks and uncertainties are
described in greater detail in the “Risk Factors” section of the
Company’s Annual Report on Form 10-K, as amended by Amendment No. 2
thereto, for the year ended December 31, 2016, which were filed
with the SEC on March 27, 2017 and May 9, 2017, respectively, and
elsewhere in the reports the Company has filed with the SEC,
including statements regarding the effects of the TCJA on the
Company’s annualized distribution yield and the treatment of such
distributions as dividends or return of capital. Unless legally
required, the Company disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise. The Company undertakes no obligation to
update these statements after the date of this release.
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version on businesswire.com: http://www.businesswire.com/news/home/20171226005072/en/
Investor Relations CounselThe Equity Group Inc.Jeremy Hellman,
212-836-9626Senior Associatejhellman@equityny.comorAdam Prior,
212-836-9606Senior Vice Presidentaprior@equityny.com
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