Hunton Advises on Complex REIT Capital Raise by Guidance Short-Term Income Trust

Hunton Andrews Kurth LLP represented Guidance Short-Term Income Trust (GSTIT), a Maryland REIT, in connection with its initial equity offering through a private placement of its common shares of beneficial interest.  The transaction marks the launch of the REIT’s first capital raise to support its investment strategy of investing in a diversified portfolio of newly-originated, Shariah-compliant home finance assets (Finance Assets) in the US. The complex offering, which is believed to be the first private offering of Finance Assets by a REIT, is a further example of Hunton’s ability to advise on unique structures by leveraging its multidisciplinary REIT platform.

GSTIT is a newly-formed REIT that intends to acquire substantially all of its Finance Assets from its affiliate, Guidance Residential, LLC. Guidance Residential is one of the leading firms that specializes in Shariah-compliant home financing in the US. Guidance Residential is focused on ethical home finance for the Muslim community and has pioneered a unique “Declining Balance Co-ownership Program” to create Shariah-compliant access to financing home ownership under the guidance of seven globally renowned Shariah scholars. The resulting Finance Assets are eligible for sale to a government-sponsored enterprise, such as Freddie Mac or Fannie Mae. GSTIT invests in the Finance Assets in accordance with a Shariah-compliant structure and strategy certified by the board of Shariah scholars.

The multi-disciplinary Hunton team working on this complex transaction was led by Hunton partners Rob Smith and Mayme Donohue.  Other team members included partners Kendal Sibley and Leslie Okinaka and counsel Joshua Milgrom for tax; partner Amy Williams and counsel Erick Carlson for 1940 Act matters; associates Josh Van Kirck, Tianlu Zhang, Alexander Abramenko, and Claire Andress for real estate capital markets; and partner Jason Harbour for restructuring.