Glossary

Taxable REIT Subsidiary (TRS) in Senior Housing

Also known as: TRS lessee, TRS

A corporate subsidiary of a REIT that can be subject to corporate tax and, unlike the REIT parent, is permitted to hold the operating economics of a senior housing or healthcare facility under a RIDEA structure.

A TRS is the vehicle that makes RIDEA work: the REIT leases the real estate to its TRS, and the TRS in turn contracts with a qualified operator to run the community. Income earned by the TRS is taxed at the corporate level (unlike the REIT's distributed income), but the tradeoff is that the REIT group can consolidate full property NOI rather than a capped lease rent. REITs must respect statutory limits on the percentage of REIT assets that can be held in TRS form, and must ensure the operator qualifies as an eligible independent contractor so the TRS is not deemed to be operating the facility itself in a way that would jeopardize REIT status.