Salomon Vet Aims To Beat The Tax Man

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Rick Singer, former head of global real estate at Salomon Brothers and now in charge of a private investment company, says he has figured out a way for foreign investors to avoid the potentially high taxes associated with investing in U.S. property. “We’ve put together off-shore entities that have unique characteristics. It’s a structure that is tax efficient for foreign investors and somewhat different than the usual blocker strategies,” he told REIT Cafe, but would not provide any specifics.

Foreign investors are subject to a 10% withholding tax, 35% capital gains tax and state and local taxes, all of which can bring the tax rate to 54%. But, noted a tax attorney, if a company is investing in the structuring or restructuring of debt it is not classified as participating in a U.S. business.

Singer is ceo of Eastbridge Al Mal, which is controlled by the Al-Kharafi Family, one of the wealthiest families in the Middle East and North African region. He is confident the unique tax benefits of Eastbridge—the real estate arm of Al Mal Investment Company--will attract other foreign and sovereign wealth investors and he is pitching it to them.

Eastbridge is hoping to make money by recapitalizing real estate, either through equity financing or workout structures and is eyeing major U.S. cities for high end assets unable to refinance, not distressed properties in troubled cities. “Ideally, we’d like to find the highest quality assets in strong, open environments; we’re not looking for distressed hotels in Las Vegas,” says Singer.

Eastbridge has offices in New York and London. The company also has an energy investment division.


by Joanna Randell