Corporations and Real Property

1. Corporations and Real Property

2. Investment Corporations Individual Investors Individual Consumers Corporate Investors Corporate Producers

3. Real Estate Investment Trust • All about REITs • A company that owns income- producing real estate • Created by Congress in 1960 to give anyone and everyone the opportunity  to invest in large-scale commercial properties • It may  focus on a particular type of property, for example offices, apartments, shopping malls, strip centers or industrial properties • Its revenue is the total rent coming in from the tenants • Its profit is what remains after the property managers, janitors, lighting companies, mortgage companies, and local units of government have been paid • To be a REIT, a company must distribute at least 90% of its taxable income to shareholders annually in the form of dividends • Public REITs in United States (Wikipedia) • Real Estate Investment Trusts (Securities and Exchange Commission)

4. 1995 2006 Changes in Timberland Ownership

5. Timber Investment Companies - Timber Investment Management Organizations • An Introduction to Timberland Investing (Lyme Timber Co) • Institutional Ownership of Timber (George Draffen) • A Survey of TIMOs (Forest Service) • Institutional Timberland Investment (Yale University) • Hancock Timber Resources Group • RMK Timberland Group • Timberland Investment Resources (private) • The Lyme Timber Company (private) • TIMOs and REITs (.docstoc) • Timber (SmartMoney 2001) • REITs Spread to Timber Industry (Wall Street Journal Nov 2005) • Wells Timberland REIT • Plum Creek • Potlatch • Pact Will Form First Publicly Traded Timberland REIT (Memphis Business Journal) • Timberland: Wealth Emerges From the Forest (Wealth Management Exchange, May 2008) • RMK and Nature Conservancy in the Adirondacks (Timberland Blog)

6. Corporations • Real estate company • Maintenance - Builder/remodeler, painter, electrician, plumber • Utilities – Bundled telecommunications, electric/gas, water • Waste • Retail companies – consumer goods – furniture, food, clothing, durable goods, • Banking and other financial services – insurance, mortgage, financial

7. Corporations(Wikipedia) • A corporation is a legal entity determined by the law of the state in which the business is incorporated • Composed of individual owners but exists separately from them • stockholders - stock holders own a part of the company that issues the stock • bondholder - bond holders loan the company money • Employs individuals and produces good or provides services • Corporate law which tries to balance the interests of the shareholders who invest capital and the employees who contribute labor - ?liability issues • Recognized by law to have rights and responsibilities like actual people • May be responsible for human rights violations - be convicted of criminal offences, such as fraud and manslaughter • “Born" into existence through its members obtaining a certificate of incorporation, they can "die" when they lose money and become insolvent

8. A corporation is legally a citizen of the state in which it is incorporated • Corporate business law differs from state to state, and many prospective corporations choose to incorporate in a state whose laws are most favorable to its business interests • Many large corporations are incorporated in Delaware without being physically located there because that state has very favorable corporate tax and disclosure laws

9. Public Corporations • Joint stock company - a business partnership in which capital is collected from the individual contributions of shareholders, each of which is given certificates of ownership (stocks) in return • The shareholders are free to transfer their ownership interest at any time by selling their stockholding to others • Ownership of stock confers a number of privileges • The company is managed on behalf of the shareholders by an elected Board of Directors – unusual for shareholder to be on board • Hold annual general meeting, produce an annual report, are audited yearly • Shareholders share in the company's net profit – also called a divided – calculated as net profit divided by the total number of owned shares • (Individual share of the profit is the dividend multiplied by the number of shares owned) • Shareholders are liable for company debts that exceed the company's ability to pay but limited to the face value of their shareholding

10. Public Companies • Public corporations – those owned by the public, whose stock is traded on the New York Stock Exchange or other exchanges • Any company that files a Form S-1 with the Securities and Exchange Commission (SEC) and raises money from the public • A public company needs to file reports • a public company with 300 or more shareholders as defined in the 1933 Securities Act can elect to become a reporting company • a public company with 500 or more public shareholders or a company with some public shareholders and assets of $5 million dollars must become a reporting company • May incorporate in any state • Minnesota Statutes • Minnesota Department of Commerce

11. Stock corporations sell stock to generate capital • Most are generally for-profit • Publicly traded corporation, the shares of which are traded on a public stock exchange (the New York Stock Exchange or NASDAQ in the United States where shares of stock of corporations are bought and sold by and to the general public • Most of the largest businesses in the world are publicly traded corporations • Non-stock corporations is a corporation without stockholders but many have members - functional equivalent of stockholders • Most are not-for-profit • Tax-exempt non-profit corporations are often called “501(c)3 corporation”, after the section of the Internal Revenue Code that addresses their tax status • A mutual benefit nonprofit corporation is a corporation formed in the United States solely for the benefit of its members - a golf club

12. Securities & Exchange Commission • The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation • Statutes and rules that govern the securities industry in the United States derive from a simple and straightforward concept • All investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it • Statutes that govern the securities industry • 17 CFR Securities and Exchange Commission • Securities Law (FindLaw) • SECLaw.com (The Securities Law Blog)

13. Consumers' cooperative Limited company Limited liability company Limited liability limited partnership Limited liability partnership Limited partnership Low-profit limited liability company Not-for-profit corporation Partnership Sole proprietorship Trust company, Trust law Minnesota Business Corporation Act (Minnesota Statutes 302A) Corporations, Business Organizations, and Associations Law (LawMoose) Importance of Corporations (ActionPA.org) CorpWatch.org Corporations (Anup Shar) Other corporate entities (Wikipedia)

14. Private Corporations • Companies which are privately owned • Capital raised via private funds • Does not need to meet the strict Securities and Exchange Commission filing requirements of public companies • US largest private companies (Forbes.com) • Finding out about private companies (Chris Roush, UNC) • Often family owned Cargill, Carlson Companies, Dairy Queen, Anderson Windows

15. The 200 largest U.S. Charities (Forbes Magazine) A guide to environmental nonprofits (MotherJones) Environmental Law Institute Environmental Defense Fund Natural Resources Defense Council Land Trust Alliance Tax for Nonprofits (Internal Revenue Service) A Guide to Minnesota's charity laws (MN Dept of Agriculture) Council of Minnesota Nonprofits Minnesota Largest Nonprofits (Star Tribune) Political, religious, environmental, and charitable purposes Nonprofit Organizations

16. Government Corporations (GAO) • A corporate entity established by Congress in which the government holds all equity • Most listed in the Government Corporation Control Act (1945) • The Act does not serve as a general incorporation law; each of these corporations have their own enabling legislation that stipulates its powers • Commodity Credit Corporation • Federal Deposit Insurance Corporation (FDIC) • Pension Benefit Guarantee Corporation • Tennessee Valley Authority (TVA) • The Saint Lawrence Seaway Development Corporation • US Postal Service • Fannie Mae • The burden of government enterprises (Cato Institute)

17. Municipal corporation (Wikipedia) Minnesota Statutes Minneapolis

18. Federal Statutes 15 USC Commerce & Trade (Cornell University) 12 USC Banks & Banking (Cornell University) 29 USC Internal Revenue Code (Cornell University) Federal Regulation 12 CFR Banks & Banking 13 CFR Business Credit & Assistance 16 CFR Commercial Practices 17 CFR Commodities & Security Exchange US Department of Labor Occupational Health & Safety US Department of Commerce International Trade Administration Federal Trade Commission Uniform Commercial Code – law governing commercial transactions Federal Policy in part

19. Standard Industrial Classification • United States government system for classifying industries by a four-digit code • Established in 1937, it is being supplanted by the six-digit North American Industry Classification System released in 1997 • Certain government departments and agencies, such as the U.S. Securities and Exchange Commission (SEC), still use the SIC codes • Manual Structure

20. Division C. Construction • building construction by general contractors or by operative builders • heavy construction other than building by general contractors and special trade contractors • construction activity by other special trade contractors engaged in specialized construction activities, such as plumbing, painting, and electrical work, and work for general contractors under subcontract or directly for property owners • general contractors usually assume responsibility for an entire construction project, but may subcontract to others all of the actual construction work or those portions of the project that require special skills or equipment • general contractors may or may not have construction workers on their payroll • Major Group 15: Building Construction General Contractors And Operative Builders • Major Group 16: Heavy Construction Other Than Building Construction Contractors • Major Group 17: Construction Special Trade Contractors

21. 1531 Operative Builders • Establishments primarily constructing buildings for sale • Builders primarily engaged in constructing of single-family houses and other buildings for sale on their own account rather than as contractors • Condominium developers on own account • Cooperative apartment developers on own account • Operative builders on own account • Speculative builders • Establishments primarily engaged in constructing and/or renovating buildings for lease or rental on their own account are classified in Real Estate, Industry Group 651

22. Division H: Finance, Insurance, And Real Estate • Major Group 60: Depository Institutions • Major Group 61: Non-depository Credit Institutions • Major Group 62: Security And Commodity Brokers, Dealers, Exchanges, And Services • Major Group 63: Insurance Carriers • Major Group 64: Insurance Agents, Brokers, And Service • Major Group 65: Real Estate • Major Group 67: Holding And Other Investment Offices

23. Industry Group 601 - Central Reserve Depository Institutions· 6011 Federal Reserve Banks 6019 Other Central Reserve Depository Institutions Industry Group 602 - Commercial Banks 6021 National Commercial Banks 6022 State Commercial Banks 6029 Other Commercial Banks Industry Group 603 - Savings Institutions 6035 Savings Institutions, Federally Chartered 6036 Other Savings Institutions Industry Group 606: Credit Unions· 6061 Credit Unions, Federally Chartered· 6062 Other Credit Unions Industry Group 608: Foreign Banking 6081 Branches and Agencies of Foreign Banks 6082 Foreign Trade and International Banking Institutions Industry Group 609: Functions Related To Depository Banking 6091 Non-deposit Trust Facilities 6099 Other functions Related to Depository Banking Major Group 60: Depository Institutions - institutions engaged in deposit banking or closely related functions, including fiduciary activities

24. Industry Group 631 - Life Insurance 6311 Life Insurance Industry Group 632 - Accident And Health Insurance And Medical 6321 Accident and Health Insurance 6324 Hospital and Medical Service Plans Industry Group 633 - Fire, Marine, And Casualty Insurance 6331 Fire, Marine, and Casualty Insurance Industry Group 635 - Surety Insurance 6351 Surety Insurance Industry Group 636 - Title Insurance 6361 Title Insurance Industry Group 637 - Pension, Health, And Welfare Funds 6371 Pension, Health, and Welfare Funds Industry Group 639 - Other Insurance Carriers 6399 Other Insurance Carriers Major Group 63: Insurance Carriers - carriers of insurance of all types, including reinsurance Agents and brokers dealing in insurance and organizations rendering services to insurance carriers or to policy holders are classified in Major Group 64

25. Major Group 61: Non-depository Credit Institutions - establishments engaged in extending credit in the form of loans • Industry Group 611 - Federal And Federally-sponsored Credit Agencies· • 6111 Federal and Federally-Sponsored Credit Agencies • Industry Group 614 • Personal Credit Institutions·6141 Personal Credit Institutions • Industry Group 615 - Business Credit Institutions • 6153 Short-Term Business Credit Institutions, Except Agricultural • 6159 Miscellaneous business Credit Institutions • Industry Group 616 - Mortgage Bankers And Brokers • 6162 Mortgage Bankers and Loan Correspondents • 6163 Loan Brokers

26. Major Group 62: Security And Commodity Brokers, Dealers, Exchanges, And Services • Establishments engaged in underwriting, purchasing, selling, or brokering securities and other financial contracts on their own account or for others; and exchanges, exchange clearinghouses, and other services allied with the exchange of securities and commodities • Industry Group 621 - Security Brokers, Dealers, And Flotation· • 6211 Security Brokers, Dealers, and Flotation Companies • Industry Group 622 - Commodity Contracts Brokers And Dealers • 6221 Commodity Contracts Brokers and Dealers • Industry Group 623 - Security And Commodity Exchanges • 6231 Security and Commodity Exchanges • Industry Group 628 - Services Allied With The Exchange Of Securities· • 6282 Investment Advice • 6289 Services Allied With the Exchange of Securities or Commodities, Not Elsewhere Classified

27. Major Group 64: Insurance Agents, Brokers, And Service • Includes agents and brokers dealing in insurance, and also organizations offering services to insurance companies and to policy holders • Industry Group 641 - Insurance Agents, Brokers, And Service • 6411 Insurance Agents, Brokers, and Service

28. Investment trusts, investment companies, holding companies, and miscellaneous investment offices Industry Group 671 - Holding Offices 6712 Offices of Bank Holding Companies 6719 Offices of Holding Companies, Not Elsewhere Classified Industry Group 672: Investment Offices 6722 Management Investment Offices, Open-End 6726 Unit Investment Trusts, Face-Amount Certificate Offices, and Closed-End Management Investment Offices Industry Group 673: Trusts 6732 Educational, Religious, and Charitable Trusts 6733 Trusts, Except Educational, Religious, and Charitable Industry Group 679: Miscellaneous Investing 6792 Oil Royalty Traders 6794 Patent Owners and Lessors 6798 Real Estate Investment Trusts 6799 Investors, Not Elsewhere Classified Major Group 67: Holding And Other Investment Offices

29. Industry Group 651 • 6513 Operators or Apartment Buildings • Establishments primarily engaged in operating apartment buildings (containing five or more housing units) • Does not include hotels, rooming and boarding houses, camps, and other lodging places for transients which are classified in Services, Major Group 70 • apartment buildings • apartment hotels • residential hotels • retirement hotels

30. 6798 Real Estate Investment Trusts • Establishments primarily engaged in closed-end investments in real estate or related mortgage assets operating so that they could meet the requirements of the Real Estate Investment Trust Act of 1960 as amended • This act exempts trusts from corporate income and capital gains taxation, provided • they invest primarily in specified assets, • pay out most of their income to shareholders, and • meet certain requirements regarding the dispersion of trust ownership • Mortgage investment trusts • Mortgage trusts • Real estate investment trusts (REIT'S) • Realty investment trusts • Realty trusts

31. REITs • A security that sells like a stock on the major exchanges and invests in real estate • REITs receive special tax considerations and typically offer investors high yields • Equity REITs invest in and own properties and derive revenue from rent • Mortgage REITsinvest in and own mortgages - loan money to owners of real estate or purchase existing mortgages or mortgage-backed securities- and derive revenue from the interest on the mortgage • Hybrid REITs combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages • Investopedia • REIT Café • National Association of REITs • Statement by NAREIT President, 1999

32. Division H. Finance, Insurance, And Real Estate • Major Group 65: Real Estate Includes owners, lessors, lessees, buyers, sellers, agents, and developers of real estate • Industry Group 651: Real Estate Operators (except Developers) and lessors • Industry Group 653: Real Estate Agents And Managers· • Edina Realty Inc, Coldwell Banker, Century21, ReMax, Exit Realty • Industry Group 654: Title Abstract Offices • Industry Group 655: Land Subdividers And Developers

33. Industry Group 651 • 6512 Operators of Nonresidential Buildings • Bank buildings • Insurance buildings • Lessors of piers, docks, and associated buildings and facilities • Commercial and industrial buildings • Operators of nonresidential buildings • Retail establishments • Shopping centers • Theater buildings

34. Underutilized Databases • Corporate Reports • Particular corporation - Target • Bond Rating Firm – Moody’s, Standard & Poor’s • Investment Advice – Newspapers, Journals • Industry Reports • Standard & Poor's NetAdvantage • LexisNexis Academic

35. General Growth Properties – REIT - nation's second-largest shopping mall owner • Established by brothers, Martin and Matthew Bucksbaum, in 1954 as General Management – opened first shopping center in Cedar Rapids, Iowa In 1960 • 1970 became General Growth Properties • 1972 became a publicly traded company on the New York Stock Exchange. • 1984 became a private company - sold 19 malls to Equitable Real Estate for $800 million but continued to manage them • 1993 became public and in 1995 moved headquarters from Des Moines, Iowa to Chicago - subsequently expanding its portfolio by acquiring existing properties and constructing new malls • On November 12, 2004, acquired The Rouse Company in the largest retail real estate merger in American history • April 16, 2009, company, owning 158 properties, second-largest mall operator at the time filed for the largest real estate bankruptcy in US history • Macy's has 106 of its 840 stores in General Growth's malls

36. Bankruptcy • The collapse of General Growth Properties, which operates more than 200 properties, is being called by analysts the largest ever failing by a mall operator • The company currently has $27.3 billion in debt versus $29.6 billion in assets • It has obtained $375 million in debtor-in-possession financing • Ridgedale Center in Minnetonka • Eden Prairie Center in Eden Prairie • Knollwood Mall in St. Louis Park • Apache Mall in Rochester • Crossroads Center in St. Cloud • River Hills Mall in Mankato • The Bankruptcy of GGP and the Prognosis for Retail REIT Debt Management