PUBLIC LAW 105-206-^JULY 22, 1998 112 STAT. 831 would be impermissible tenant service income were such property held by the exempt REIT and such services furnished by the exempt REIT. (3) EXCEPTION FOR CERTAIN MARKET RATE OBLIGATIONS. — Such term shall not include any obligation— (A) payments under which would be treated as interest if received by a REIT; and (B) the rate of interest on which does not exceed an arm's length rate, (4) EXCEPTION FOR EXISTING OBLIGATIONS.—Such term shall not include any obligation— (A) which is secured on March 26, 1998, by an interest in real property; and (B) which is held on such date by the exempt REIT or any entity which is a member of the stapled REIT group on such date and at all times thereafter, but only so long as such obligation is secured by such interest, and the interest payable on such obligation is not changed to a rate which exceeds an arm's length rate unless such change is pursuant to the terms of the obligation in effect on March 26, 1998. The preceding sentence shall not cease to apply by reason of the refinancing of the obligation if (immediately after the refinancing) the principal amount of the obligation resulting from the refinancing does not exceed the principal amount of the refinanced obligation (immediately before the refinancing) and the interest payable on such refinanced obligation does not exceed an arm's length rate. (5) TREATMENT OF ENTITIES WHICH ARE NOT STAPLED, ETC. ON MARCH 26, 1998. —^A rule similar to the rule of subsection (b)(5) shall apply for purposes of this subsection. (6) INCREASE IN AMOUNT OF NONQUALIFIED OBLIGATIONS IF INCREASE IN OWNERSHIP OF SUBSIDIARY.— ^A rule similar tO the rule of subsection (c)(3) shall apply for purposes of this subsection. (7) COORDINATION WITH SUBSECTION (a).—This subsection shall not apply to the portion of any interest in real property that the exempt REIT or stapled entity holds or is treated as holding under this section without regard to this subsection, (e) DEFINITIONS. —For purposes of this section— (1) REIT GROSS INCOME PROVISIONS. —The term "REIT gross income provisions" means— (A) paragraphs (2), (3), and (6) of section 856(c) of the Internal Revenue Code of 1986; and (B) section 857(b)(5) of such Code. (2) EXEMPT REIT. —The term "exempt REIT" means a real estate investment trust to which section 269B of the Internal Revenue Code of 1986 does not apply by reason of paragraph (3) of section 136(c) of the Tax Reform Act of 1984. (3) STAPLED REIT GROUP.— The term "stapled REIT group" means, with respect to an exempt REIT, the group consisting of— (A) all entities which are stapled entities with respect to the exempt REIT; and (B) all entities which are 10-percent subsidiary entities of the exempt REIT or any such stapled entity. (4) 10-PERCENT SUBSIDIARY ENTITY.— Applicability. Applicability.
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