Outdoor storage rents and customary services qualified as REIT income

Plain-English summary

A company planning to elect real estate investment trust status owned outdoor industrial storage properties and leased storage space to unrelated tenants. The storage fees covered space plus services and amenities such as security, lighting, electricity, equipment charging, unattended parking, and certain shared facilities. Based on the company's representations, the IRS ruled that the total rents, including amounts tied to customary services and included amenities, qualified as rents from real property under IRC § 856(d). It also ruled that the described services and separately charged amenity access would not create impermissible tenant service income or disqualify the rents. Rent from leases to the company's taxable REIT subsidiary also qualified under the limited rental exception, provided the represented occupancy and comparable-rent conditions were met.

Ruling snapshot

• Question: Would storage fees, customary property services, included amenities, and qualifying leases to a taxable REIT subsidiary produce rents from real property for the REIT income tests?
• Outcome: Approved
• Key authorities: IRC §§ 512(b)(3) and 856(c), (d); Treas. Reg. §§ 1.512(b)-1, 1.856-4, and 1.856-10; Rev. Rul. 2004-24

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202530005 Third Party Communication: None
Release Date: 7/25/2025 Date of Communication: Not Applicable
Index Number: 856.00-00, 856.04-00
Person To Contact:
----------------------------------------- ----------------, ID No. ------------
------------------------------------- Telephone Number:
---------------------------- -------------------
----------- Refer Reply To:
----------------------------- CC:FIP:2
----------------------------- PLR-119778-24
Date:
April 28, 2025

Legend

Taxpayer = --------------------------------------------------------------

State = -------------

Date = -------------------------

Country = ------------------

City A = ---------------------

City B = ----------------------------------

City C = ----------------------------

City D = -----------------------------

Equipment = ----------------------------------------------
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A = ---

B = -----

C = ------

D = -----

E = ------

                                             2

F = -----

G = ------

H = -----

I = ---------

J = ----

K = ---

L = ----------

Dear ----------------:

  This ruling responds to a letter dated October 28, 2024, and subsequent

correspondence, submitted on behalf of Taxpayer. Taxpayer requests rulings that:

    (1) amounts received by Taxpayer from unrelated third parties under leases,
    licenses, or other similar agreements for the use of certain real property assets
    described below are rents from real property within the meaning of section
    856(d) for purposes of section 856(c)(2) and (c)(3) of the Internal Revenue Code
    (the “Income Tests”);

    (2) the amenities and services described in this ruling will not give rise to
    impermissible tenant service income (“ITSI”) within the meaning of section
    856(d)(7) and will not cause any portion of the amounts described in (1) to fail to
    qualify as rents from real property within the meaning of section 856(d);

    (3) amounts Taxpayer receives for the provision of services and Included
    Amenities described in this ruling constitute rents from real property within the
    meaning of section 856(d) for purposes of the Income Tests;

    (4) amounts received by Taxpayer pursuant to a lease of certain assets and
    areas to its taxable REIT subsidiary (“TRS”) constitute rents from real property
    within the meaning of section 856(d) for purposes of the Income Tests.

                                         FACTS

  Taxpayer was formed as a State limited liability company on Date. Additionally,

Taxpayer intends to elect to be taxed as a real estate investment trust (“REIT”) within
the meaning of section 856. An existing subsidiary of Taxpayer that is a State
corporation will make a joint election with Taxpayer to be treated as a TRS of Taxpayer.

    Outdoor Industrial Storage Properties

  Taxpayer has acquired and intends to acquire, either directly or indirectly through

disregarded entities or entities classified as partnerships, interests in certain properties

PLR-119778-24 3

located throughout Country (each a “Property” or collectively “Properties”). Properties
provide outdoor storage for Equipment.

   Property A is comprised of A acres of land located in City A. It is paved with

gravel, surrounded by fencing and improved with lighting. Property A has approximately
B storage units available, as well as indoor storage and office space.

   Property B is comprised of C acres of land located in City A. Property B is

located in the same metropolitan region as Property A. It is paved with gravel,
surrounded by barbed wire fencing and improved with lighting. Property B has D
storage units available.

   Property C is comprised of E acres of land located in City B. It is paved with

gravel, surrounded by fencing and improved with lighting. Property C has F storage
units available.

    Property D is comprised of G acres of land located in City C. It is paved with

asphalt and concrete, surrounded by barbed wire and electric fencing and improved
with lighting. Property D has H storage units available and over I square feet of office
space.

   Property E is comprised of J acres of land located in City D. It is paved with

gravel, surrounded by fencing and improved with lighting. Property E has K storage
units available.

   Taxpayer represents that each of the assets that comprise a Property is either

land, an interest in land, an improvement to land that is an inherently permanent
structure, or a structural component of an inherently permanent structure within the
meaning of section 1.856-10 of the Income Tax Regulations.

   Storage Agreements

    Taxpayer will enter into agreements with unrelated third-party individuals or

businesses (“Tenant” or collectively “Tenants”) for the use of a specified amount of
space at a Property for the storage of Equipment (“Storage Agreements”). While the
Properties primarily offer outdoor industrial storage space, some indoor industrial space
is also available. The indoor industrial space is a specified area of space in a large
open warehouse-type building with multiple large numbered “doors” (i.e., docking bays)
on the “inbound” side of the building. Where Taxpayer leases indoor industrial space at
a Property to a Tenant, the Tenant has the exclusive right to use a specifically identified
space (associated with one or more specified docking bays) for a term of at least L (with
many such leases having terms of multiple months or years). Any equipment in the
indoor industrial space (e.g., forklifts) is the property of the Tenant and is operated only
by the Tenant. Tenants will handle their own cargo in such spaces. With respect to the
outdoor industrial space, a Storage Agreement may allocate specifically identified

PLR-119778-24 4

storage space for a particular Tenant’s use, and all Storage Agreements will allocate a
specified amount of space reserved for the Tenant’s use. Additionally, Property A and
Property B are in close proximity to each other in the same metropolitan area, and a
Storage Agreement may provide that a particular Tenant’s allocated amount of storage
space may be available at either Property A or Property B. Taxpayer will be obligated
at all times to ensure that the amount of space specified in a Storage Agreement is
reserved for and available to the relevant Tenant at the Property or at least one of the
Properties specified in the Storage Agreement.

    Storage Agreements will have a term of no less than L and will typically renew

automatically on a month-to-month basis. Pursuant to a Storage Agreement, a Tenant
will pay a fixed dollar amount for the use of space at a Property or Properties (“Storage
Fee”). The Storage Fee will include payment for the use of space, security, lighting and
electricity (excluding electricity provided through EV Stations), moving stacked
equipment, parking, and Included Amenities (all described and defined below). Tenants
will be obligated to pay the Storage Fee regardless of whether they use their leased
space. The Storage Fee may be increased from time to time if Taxpayer determines
that market conditions (e.g., inflation or an increase in the fair rental value of the leased
space) merit an adjustment to the applicable Storage Fee. Such adjustment will only be
made in connection with the renewal of a Storage Agreement. Taxpayer represents
that the amount of a Storage Fee will not depend in whole or in part on the income or
profits of any person within the meaning of section 856(d)(2)(A).

    Taxpayer represents that, with respect to each Storage Agreement, the rent

attributable to personal property, if any, which is leased under, or in connection with, the
lease of real property will not exceed 15% of the total rent for the taxable year paid by
the Tenant for both the real and personal property leased under, or in connection with,
such Storage Agreement.

   Services and Amenities

    Taxpayer will design, inspect, maintain, and repair the Properties. Taxpayer will

also ensure that Equipment is not stored at a Property without a valid Storage
Agreement. Taxpayer represents that inspecting, maintaining, and repairing the
Properties are not services provided to any particular tenant and are customary services
provided at similar properties in the geographic area in which Taxpayer’s Properties are
located. The Properties may include unattended parking areas adjacent, or in close
proximity, to the storage area of any such Property. Taxpayer represents that any
parking area will be appropriate in size for the number of Tenants expected to use
storage space at the Property, and such Tenants’ guests, customers and subtenants.
There will be no additional charge for the use of the parking area. The parking areas
will not have an attendant and neither Taxpayer nor any other entity will perform any
activities in connection with the parking areas, other than routine maintenance, repair,
and the provision of electricity for lighting.

PLR-119778-24 5

   Taxpayer will engage a third-party utility provider that is an independent

contractor from whom Taxpayer does not derive or receive any income (an “IK”) to
provide Tenants with certain utility services, such as furnishing electricity to light the
Properties and, at some Properties, furnishing electricity to power and charge
Equipment including through electric vehicle charging stations (“EV Stations”). To make
the electricity provided at EV Stations available to Tenants and Tenants’ subtenants,
Taxpayer will (i) lease space on a long-term basis to a third party who will install, own,
and maintain the EV Stations; (ii) own the EV Stations and engage a third party to
maintain them; and/or (iii) own and maintain the EV Stations itself. The EV Stations at
Properties will have a connection mechanism specifically designed for powering
Equipment and that is not suitable for smaller personal electric vehicles (e.g., sedans
and sports-utility vehicles.) Additionally, the EV Stations will be located within the
fenced perimeters of the Properties. Therefore, the EV stations will not be available to
or accessible by the general public.

   Taxpayer intends to make electricity available in storage areas (including through

EV Stations) to power and charge Tenant Equipment. Tenants may be charged a
higher Storage Fee for storage space with access, or in close proximity, to electricity
sources (including EV Stations) to power and charge Equipment. Taxpayer will charge
Tenants for electricity drawn from EV Stations, and depending on the particular
Property, Taxpayer may charge a mark-up on such electricity (Storage Fees plus
amounts paid by Tenants for electricity provided through EV Stations, including any
mark-up, “Total Rents”). Taxpayer represents that the mark-up on electricity drawn
from EV Stations represents a return on the costs of installing the EV Stations and the
ongoing costs of administration and maintenance of the EV Stations. Taxpayer further
represents that it will only install EV Stations at Properties where the provision of EV
Stations is customary for similar properties in the applicable geographic region.

    Taxpayer may provide security at some or all of the Properties. The security

services may include monitoring the Property through security cameras, providing
security guards, or both. Generally, whether or not additional security is provided,
Tenants will enter and exit a Property through a gate with a key code or electronic
device access. In addition, Taxpayer may have one or more Taxpayer employees
whose responsibilities include verifying that stored items which are present are
permitted to be stored at the relevant Property pursuant to an existing Lease Agreement
(i.e., confirming that Tenants do not leave Tenant Assets at the Properties after their
Lease Agreements expire). Taxpayer represents that the provision of security is a
service that is customarily furnished to tenants of similar properties in the geographic
markets in which the Properties are located. Taxpayer further represents that this
service will be provided to all Tenants and will not be a personal service rendered to any
particular Tenant.

   Generally, Tenants will move their own Equipment into and out of the storage

area, but in cases in which a Tenant’s Equipment can be stacked, the Tenant will
deliver its Equipment to a staging area at the appropriate Property. One or more

PLR-119778-24 6

employees of the TRS or an IK will move the Tenant’s Equipment to the appropriate
area within the Property to ensure efficient storage of stacked Equipment. Taxpayer
represents that the movement of Tenant Equipment in the above manner is a service
that is customarily furnished to tenants of similar properties in the geographic markets in
which the Properties are located. Additionally, Taxpayer represents that this service will
be provided to all Tenants with that type of Equipment.

    Some Properties may include certain amenities that will be available to all

Tenants of that Property, such as portable restrooms, shower facilities, and weigh
stations (“Amenities”). At some Properties, access to the Amenities will be available to
all tenants for no charge (“Included Amenities”). At other Properties, Tenants may be
charged a separate fee for access (“Access Fee”) to an Amenity (“Access Fee
Amenities”). The Access Fee is a fee separate and apart from the Storage Fee. For
Access Fee Amenities, Taxpayer represents that a TRS or IK will provide all cleaning
and maintenance services related to such Amenities.

   Taxpayer will provide no services other than utilities, cleaning, and basic

maintenance with respect to the Included Amenities. The services rendered in
connection with the Included Amenities are included as part of the Storage Fee, are
provided to all tenants, and are not personal services rendered to any particular tenant.
Taxpayer represents that the services provided in connection with the Amenities are
customarily provided to tenants of similar properties in the applicable geographic region.
When Tenants are charged an Access Fee, Taxpayer will treat those amounts it
receives for such access as other than rents from real property for purposes of section
856(d).

 Taxpayer represents that any ITSI for any taxable year will not exceed 1% of all

amounts received or accrued during such taxable year directly or indirectly by the
Taxpayer with respect to a Property within the meaning of section 856(d)(7)(B).

    Some Properties may also include additional services offered by a TRS or IK, for

example 17-point truck and trailer inspections (which are required by the U.S. Customs
and Border Protection agency), truck or equipment fueling, truck or equipment washes,
and truck or equipment maintenance and repairs (the “Additional Services”). The TRS
will lease any space necessary at a Property to perform the Additional Services.
Additional Services will not be offered pursuant to or in connection with a Storage
Agreement. Tenants will contract directly with the TRS or IK for Additional Services and
pay the TRS or IK directly for such services. Taxpayer represents that it will not receive
rent from any IK providing any Additional Services, will not derive any income from the
provision of Additional Services by the TRS or IK, and will bear none of the cost of
providing the Additional Services.

PLR-119778-24 7

   TRS Lease

     Taxpayer intends to enter into a lease with its TRS as tenant (“TRS Lease”)

pursuant to which Taxpayer will lease a specified amount of storage space at some or
all of its Properties to the TRS on a long-term basis under the limited rental exception of
section 856(d)(8)(A). TRS will sublease portions of such space to third parties who wish
to enter into arrangements for the use of storage space with a term of less than L.
Pursuant to the TRS Lease, Taxpayer also intends to lease to the TRS certain assets
and areas at the Properties that the TRS will use to provide any Additional Services (as
discussed above). If the TRS does sublease space to a third party, Taxpayer will still
treat such subleased space as leased to the TRS.

    Taxpayer represents that with respect to each Property, at least 90% of the

leased space will be rented to persons other than the TRS or any other related person
(within the meaning of section 856(d)(2)(B)). Taxpayer further represents that the
amounts paid as rents from real property to Taxpayer pursuant to the TRS Lease will be
substantially comparable to Storage Fees paid by Tenants for comparable space. If no
comparable space at a Property is leased to an unrelated party, the amount paid under
a TRS Lease will be substantially comparable to amounts paid for similar space leased
to unrelated parties in the same geographic area. Taxpayer also represents that rent
attributable to personal property, if any, which is leased under or in connection with, the
lease of real property pursuant to a TRS Lease will not exceed 15% of the total rent for
the taxable year paid by the TRS for both the real and personal property leased under,
or in connection with, such TRS Lease.

                              LAW AND ANALYSIS

  Section 856(c)(2) provides that at least 95% of a REIT’s gross income must be

derived from, among other sources, rents from real property.

  Section 856(c)(3) provides that at least 75% of a REIT’s gross income must be

derived from, among other sources, rents from real property.

    Section 856(d)(1) provides that rents from real property include (subject to

exclusions provided in section 856(d)(2)): (A) rents from interests in real property;
(B) charges for services customarily furnished or rendered in connection with the rental
of real property, whether or not such charges are separately stated; and (C) rent
attributable to personal property leased under, or in connection with, a lease of real
property, but only if the rent attributable to such personal property for the taxable year
does not exceed 15% of the total rent for the taxable year attributable to both the real
and personal property leased under, or in connection with, such lease.

  Section 1.856-4(a) defines the term “rents from real property” generally as the

gross amounts received for the use of, or the right to use, real property of the REIT.

PLR-119778-24 8

   Section 856(d)(2)(A) provides that the term rents from real property does not

include any amount received or accrued, directly or indirectly, with respect to any real or
personal property, if the determination of such amount depends in whole or in part on
the income or profits derived from any person from such property.

    Taxpayer rents space at Properties to Tenants for the storage of Tenants’

Equipment. Storage Agreements are for a term of at least L and are for a specified
amount of space at a Property or specified Properties that is reserved for the Tenant at
all times during the term of the Storage Agreement. The fact that the space is not
specifically identified does not change the fact that Tenants have reserved space at a
specified Property or Properties. Tenants pay a flat fee for the use of space that may
be increased based solely on market conditions. Taxpayer represents that the Storage
Fee is not based in whole or in part on the income or profits of any person and that
Tenants pay the Storage Fee during the term of the lease whether or not they are
actually using the space. Thus, the portion of the Storage Fee attributable to the
reservation of space at a Property or Properties is rents from interests in real property
pursuant to section 856(d)(1)(A).

    Section 856(d)(2)(C) provides that any ITSI is excluded from the definition of

rents from real property. Section 856(d)(7)(A) defines “ITSI” to mean, with respect to
any real or personal property, any amount received or accrued directly or indirectly by
the REIT for services furnished or rendered by the REIT to tenants at such property, or
for managing or operating such property. Section 856(d)(7)(B) provides that if the
amount of ITSI with respect to a property for any taxable year exceeds 1% of all
amounts received or accrued during such taxable year directly or indirectly by the REIT
with respect to such property, the ITSI of the REIT will include all of the amounts
received or accrued with respect to the property. Section 856(d)(7)(D) provides that for
purposes of section 856(d)(7)(A), the amount treated as received by a REIT for any
service (or management or operation) shall not be less than 150% of the direct cost of
the REIT in furnishing or rendering the service (or providing the management or
operation).

  Section 856(d)(7)(C) provides certain exclusions from ITSI. Section

856(d)(7)(C)(i) provides that for purposes of section 856(d)(7)(A), services furnished or
rendered, or management or operation provided, through an independent contractor
from whom the REIT does not derive or receive any income or through a TRS of the
REIT shall not be treated as furnished, rendered, or provided by the REIT. Section
856(d)(7)(C)(ii) provides that ITSI shall not include any amount which would be
excluded from unrelated business taxable income under section 512(b)(3) if received by
an organization described in section 511(a)(2).

   Section 1.856-4(b)(1) provides that, for purposes of sections 856(c)(2) and (c)(3),

the term rents from real property includes charges for services customarily furnished or
rendered in connection with the rental of real property, whether or not the charges are
separately stated. Services furnished to the tenants of a particular building will be

PLR-119778-24 9

considered customary if, in the geographic market in which the building is located,
tenants in buildings which are of a similar class are customarily provided with the
service. In particular geographic areas where it is customary to furnish electricity or
other utilities to tenants in buildings of a particular class, the submetering of such
utilities to tenants in such buildings will be considered a customary service. To qualify
as a service customarily furnished, the service must be furnished or rendered to the
tenants of the REIT or, primarily for the convenience or benefit of the tenant, to the
guests, customers, or subtenants of the tenant.

    Section 512(b)(3) provides, in part, that there shall be excluded from the

computation of unrelated business taxable income all rents from real property and all
rents from personal property leased with such real property, if the rents attributable to
such personal property are an incidental amount of the total rents received or accrued
under the lease, determined at the time the personal property is placed in service.

   Section 1.512(b)-1(c)(5) provides that payments for the use or occupancy of

rooms and other space where services are also rendered to the occupant, such as for
the use or occupancy of rooms or other quarters in hotels, boarding houses, or
apartment houses furnishing hotel services, or in tourist camps or tourist homes, motor
courts or motels, or for the use or occupancy of space in parking lots, warehouses, or
storage garages, do not constitute rent from real property. Generally, services are
considered rendered to the occupant if they are primarily for his convenience and are
other than those usually or customarily rendered in connection with the rental of rooms
or other space for occupancy only. The supplying of maid service, for example,
constitutes such service; whereas the furnishing of heat and light, the cleaning of public
entrances, exits, stairways, and lobbies, and the collection of trash are not considered
as services rendered to the occupant.

   Section 1.856-4(b)(5)(ii) provides that the trustees or directors of the REIT are

not required to delegate or contract out their fiduciary duty to manage the REIT itself, as
distinguished from rendering or furnishing services to the tenants of its property or
managing or operating the property. Thus, the trustees or directors may do all those
things necessary, in their fiduciary capacities, to manage and conduct the affairs of the
REIT itself. For example, the trustees or directors may establish rental terms, choose
tenants, enter into and renew leases, and deal with taxes, interest, and insurance,
relating to the REIT's property. The trustees or directors may also make capital
expenditures with respect to the REIT's property and may make decisions as to repairs
of the REIT's property, the cost of which may be borne by the REIT.

   The design of the Properties is within Taxpayer’s fiduciary duties to manage the

REIT itself. Moreover, Taxpayer represents that inspecting, maintaining, and repairing
the Properties are not services provided to any particular tenant and are customary
services provided at similar properties in the geographic area in which Taxpayer’s
Properties are located. The security services of secured access and monitoring of the
Properties through surveillance cameras, security guards, or both are also services

PLR-119778-24 10

provided to all Tenants rather than services rendered to the occupant. Taxpayer
represents that the provision of security is a service that is customarily furnished to
tenants of similar properties in the geographic markets in which the Properties are
located. The portion of the rents from the Properties that is attributable to the routine
inspection, maintenance, repair, and security of the Properties is income that would be
excluded from unrelated business taxable income under section 512(b)(3) if received by
an organization described in section 511(a)(2). Pursuant to section 856(d)(7)(C)(ii), the
income from these services, as well as the designing of the Properties, will not be
treated as ITSI.

   Taxpayer will provide electricity through an IK to light and to power and charge

Tenants’ Equipment at the Properties. Taxpayer represents that providing electricity
and light is a utility service that is customarily furnished to tenants of similar properties
in the geographic markets in which the Properties are located. The portion of the rents
from the Properties that is attributable to the routine lighting and provision of electricity
is income that would be excluded from unrelated business taxable income under section
512(b)(3) if received by an organization described in section 511(a)(2). Pursuant to
section 856(d)(7)(C)(ii), the income from these services will not be treated as ITSI.

    With respect to EV Stations, Taxpayer will charge a user for the electricity drawn

from the EV Station as well as a markup on the electricity. Taxpayer represents that it
will only install EV Stations at Properties where the provision of EV Stations is
customary for similar properties in the applicable geographic region. Furthermore, the
EV Stations are located within the perimeter fencing of the Properties, are for
Equipment (excluding personal vehicles) charging rather than personal vehicle charging
and are not accessible by the general public. The service provided by an EV Station is
electricity and charging for electricity drawn by a Tenant or a subtenant is analogous to
the submetering of utilities, which is identified as a customary service in section 1.856-
4(b)(1). Taxpayer represents that the mark-up on electricity drawn from EV Stations
represents a return on the costs of installing the EV Stations and the ongoing costs of
administration and maintenance of the EV Stations. Thus, under the circumstances
described above, any income from Taxpayer’s provision of electricity to Tenants through
the use of EV Stations will not be considered ITSI.

   Taxpayer represents that a TRS or IK may move certain Equipment in and out of

a Property for purposes of stacking the Equipment. Taxpayer represents that the
service of moving the Equipment is customarily provided to tenants of similar properties
in the geographic markets in which the Properties are located. Additionally, Taxpayer
represents that moving Equipment will be provided to all Tenants with that type of
Equipment. Pursuant to section 856(d)(7)(C)(i), the income from moving Equipment will
not be treated as ITSI.

    Revenue Ruling 2004-24, 2004-1 C.B. 550, identifies circumstances in which a

REIT’s income from providing parking facilities at its rental real properties qualifies as
rents from real property under section 856(d). In situation 1 of the revenue ruling, the

PLR-119778-24 11

REIT provides unattended parking facilities for the use of the tenants of its buildings and
their guests, customers, and subtenants. Each parking facility is located in or adjacent
to a building occupied by tenants of the REIT and is appropriate in size for the number
of tenants and their guests, customers, and subtenants who are expected to use the
facility. The parking facilities do not have parking attendants. The REIT maintains,
repairs, and lights the parking facilities as well as performs certain fiduciary functions,
such as dealing with taxes and insurance, as permitted by section 1.856–4(b)(5)(ii).

   Revenue Ruling 2004-24 holds that amounts received by the REIT for furnishing

unattended parking facilities, under the circumstances described in Situation 1, qualify
as rents from real property under section 856(d).

    Based on Taxpayer’s representations the parking that will be provided at

Properties is similar to situation 1 of the revenue ruling. As in situation 1, the parking
will be appropriate in size for the number of Tenants expected to use storage space at
the Property (and Tenants’ guests and customers), there will be no additional charge for
the use of the parking area, and the parking will be unattended. Accordingly, amounts
received that are attributable to the parking provided by Taxpayer qualify as rents from
real property under section 856(d).

     Income received as part of Storage Fees that is attributable to making available

to all tenants at no additional cost a space such as a shower facility or weigh station is
not income from the provision of a service and is therefore not ITSI. Taxpayer has
represented that the services of providing utilities, cleaning, and general maintenance
provided in connection with the Included Amenities are customarily provided to tenants
of similar outdoor storage facilities in the applicable geographic region where each
Property is located. With respect to the Included Amenities, these services are provided
to all tenants and are not personal services rendered to any particular tenant. The
portion of the rents from the Properties that is attributable to the services provided in
connection with the Included Amenities is income that would be excluded from
unrelated business taxable income under section 512(b)(3) if received by an
organization described in section 511(a)(2). Pursuant to section 856(d)(7)(C)(ii), the
income from these services provided in connection with the Included Amenities will not
be treated as ITSI.

   Taxpayer represents that when it charges an Access Fee for the use of an

Amenity, Taxpayer will treat such income as other than rents from real property for
purposes of section 856(d). Furthermore, at Properties where an Access Fee is
charged for the use of an Amenity, a TRS of Taxpayer will provide the services of
providing utilities, cleaning, and general maintenance provided in connection with the
Amenity. Section 856(d)(7)(C)(i) provides that for purposes of section 856(d)(7)(A),
services furnished or rendered through a TRS of the REIT shall not be treated as
furnished, rendered, or provided by the REIT. As such, the income from these services,
while not rents from real property, will not be treated as ITSI.

PLR-119778-24 12

   All fees for Additional Services are separately billed to customers and paid by

those customers directly to the providers of the Additional Services, which are either a
TRS of Taxpayer or an IK. Taxpayer bears none of the direct costs of providing the
Additional Services and derives no income from the provision of the Additional Services.
Thus, availability of the Additional Services will not result in ITSI to Taxpayer.

 Taxpayer represents that any ITSI for any taxable year will not exceed 1% of all

amounts received or accrued during such taxable year directly or indirectly by the
Taxpayer with respect to a Property within the meaning of section 856(d)(7)(B).

    Taxpayer also represents that, with respect to each Storage Agreement, the rent

attributable to personal property, if any, which is leased under, or in connection with, the
lease of real property will not exceed 15% of the total rent for the taxable year paid by
the Tenant for both the real and personal property leased under, or in connection with,
such Storage Agreement.

    Section 856(d)(2)(B) provides that rents from real property do not include

amounts received directly or indirectly from a corporation if the REIT owns, directly or
indirectly, 10 percent or more of the total combined voting power of the shares of all
voting classes or 10 percent or more of the total value of the shares of all classes of
stock of the corporation. Rents from real property also do not include amounts received
directly or indirectly from any person that is not a corporation if the REIT owns, directly
or indirectly, an interest of 10 percent or more in the assets or net profits of such
person.

    Section 856(d)(8) provides that amounts paid to a REIT by a TRS of such REIT

shall not be excluded from rents from real property by reason of section 856(b)(2)(B) if
the terms of the limited rental exception of section 856(d)(8)(A) are met. The
requirements of section 856(d)(8)(A) are met with respect to any property if at least 90%
of the leased space of the property is rented to persons other than TRSs of such REIT
and other than related parties described in section 856(d)(2)(B), but only to the extent
that the amounts paid to the REIT by the TRS as rents from real property (without
regard to section 856(d)(2)(B)) are substantially comparable to such rents paid by the
other tenants of the REIT’s property for comparable space.

   Taxpayer represents that at least 90% of the leased space of each Property will

be leased to persons other than a TRS and other related parties described in section
856(d)(2)(B). Taxpayer has represented that whenever possible, amounts paid to
Taxpayer by a TRS will be substantially comparable to rents paid by other Tenants of
the Property. However, where there is no similarly rented space at a Property,
Taxpayer has represented that payments made by a TRS for the lease of space at the
Property will be substantially comparable to amounts paid for similar space leased to
unrelated parties in the same geographic area. Accordingly, based on Taxpayer’s
representations, and provided at least 90% percent of the leased space at a Property is
leased to persons other than TRSs or related parties described in section 856(d)(2)(B),

PLR-119778-24 13

rents received by Taxpayer from a TRS for the leasing of space at a Property will be
treated as rents from real property under section 856(d) through the application of
section 856(d)(8)(A).

                                 CONCLUSION

   Based on the facts submitted and representations made, we conclude the

following:

  (1) Total Rents received by Taxpayer from unrelated third parties under Storage
  Agreements for the use of space at Properties, the provision of services
  described in this ruling with respect to such space (including electricity drawn
  from EV Stations), Included Amenities and the provision of services described in
  this ruling with respect to Included Amenities are rents from real property within
  the meaning of section 856(d) for purposes of the Income Tests.

  (2) The services and Amenities described in this ruling, including the Access
  Fees for Access Fee Amenities, will not give rise to ITSI within the meaning of
  section 856(d)(7) and will not cause any portion of the Total Rents to fail to
  qualify as rents from real property within the meaning of section 856(d).

  (3) The amounts received by Taxpayer pursuant to a lease of space at Properties
  to its TRS constitute rents from real property within the meaning of section 856(d)
  for purposes of the Income Tests.

     Except as expressly provided herein, no opinion is expressed or implied

concerning the tax consequences of any aspect of any transaction or item discussed or
referenced in this letter. In particular, we express no opinion regarding whether
Taxpayer otherwise qualifies as a REIT under part II of subchapter M of chapter 1 of the
Code. Additionally, no opinion is expressed regarding whether any assets are real
property for purposes of section 856, any amount received by Taxpayer depends on the
income or profits of any person, any activities are fiduciary duties to manage the REIT
itself, or any services are customarily provided to tenants of similar properties in the
same geographic market.

    Furthermore, the ruling herein related to whether any portion of the Storage Fees

attributable to the services and amenities described above is ITSI is specifically limited
to whether the income is qualifying income for REIT qualification purposes. The
definition of rents from real property under section 856(d) differs in scope and structure
from the definition of rents from real property under section 512(b)(3), which applies to
exempt organizations described in section 511(a)(2). Therefore, an exempt
organization providing the same service may have unrelated business taxable income
because the income may not be excluded under section 512(b)(3) as rents from real
property.

PLR-119778-24 14

  This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of

the Code provides that it may not be used or cited as precedent.

     In accordance with the Powers of Attorney on file with this office, a copy of this

letter is being sent to your authorized representatives.

                                           Sincerely,


                                           ___________________________
                                           Matthew P. Howard
                                           Senior Counsel, Branch 2
                                           Office of Associate Chief Counsel
                                           (Financial Institutions & Products)

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