Page:United States Statutes at Large Volume 112 Part 1.djvu/854

 112 STAT. 828 PUBLIC LAW 105-206-^ULY 22, 1998 (A) the acquisition is pursuant to a written agreement (including a put option, buy-sell agreement, and an agreement relating to a third party default) which was binding on such date and at all times thereafter on such REIT or stapled entity; or (B) the acquisition is described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission. (3) IMPROVEMENTS AND LEASES.— (A) IN GENERAL.— Except as otherwise provided in this paragraph, the term "nonqualified real property interest" shall not include— (i) any improvement to land owned or leased by the exempt REIT or any member of the stapled REIT group; and (ii) any repair to, or improvement of, any improvement owned or leased by the exempt REIT or any member of the stapled REIT group, if such ownership or leasehold interest is a qualified real property interest. (B) LEASES.— The term "nonqualified real property interest" shall not include— (i) any lease of a qualified real property interest if such lease is not otherwise such an interest; or (ii) any renewal of a lease which is a qualified real property interest, but only if the rent on any lease referred to in clause (i) or any renewal referred to in clause (ii) does not exceed an arm's length rate. (C) TERMINATION WHERE CHANGE IN USE. — (i) IN GENERAL.— Subparagraph (A) shall not apply to any improvement placed in service after December 31, 1999, which is part of a change in the use of the property to which such improvement relates unless the cost of such improvement does not exceed 200 percent of— (I) the cost of such property; or (II) if such property is substituted basis property (as defined in section 7701(a)(42) of the Internal Revenue Code of 1986), the fair market value of the property at the time of acquisition. (ii) BINDING CONTRACTS.— For purposes of clause (i), an improvement shall be treated as placed in service before January 1, 2000, if such improvement is placed in service before January 1, 2004, pursuant to a binding contract in effect on December 31, 1999, and at all times thereafter. (4) EXCEPTION FOR PERMITTED TRANSFERS, ETC. —The term "nonqualified real property interest" shall not include any interest in real property acquired solely as a result of a direct or indirect contribution, distribution, or other transfer of such interest from the exempt REIT or any member of the stapled REIT group to such REIT or any such member, but only to the extent the aggregate of the interests of the exempt E^IT and all stapled entities in such interest in real property (determined in accordance with subsection (c)(1)) is not increased by reason of the transfer.

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