About Adam Cohen
In a September 2024 interview with Nareit, Adam Cohen, senior vice president of tax at Safehold, discussed challenges in real estate tax reporting. He stated that the industry "needs to catch up with what's happening outside the real estate industry in terms of data management and analytics," noting that transactions are recorded manually in an automated environment. Cohen attributed this to real estate companies running "lean and mean" with limited budgets and staffing, and said that "bringing in young people and trying to train them in a very complex world is almost impossible." He expressed interest in using AI and automation for tasks like computing taxable income and adjustments.
Cohen also described common long-term incentive structures in REITs. He said that "L tips" generally refer to profits interests in the operating partnership, which are typically offered to senior executives, while junior employees more often receive restricted stock units. He noted that few REITs use options because REIT growth is "very long-term, very steady state," making options less attractive over short vesting periods.
Source: AI-verified profile updated from Adam Cohen's recent appearances.
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Transcript (8 segments)
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Interviewer0:00
The real estate industry needs to catch up with what's happening outside the real estate industry in terms of data management and analytics, which is recording transactions in a way that are not only important for SEC reporting but also for the myriad of tax reporting. Joining me today is Adam Cohen, Senior Vice President of Tax with Safehold. Adam, thanks so much for joining us today.
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Adam Cohen0:21
You're welcome, thank you for having me.
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Interviewer0:23
Now you've been with several REITs in your career. What are the biggest issues confronting you as head of tax within all the different sectors that you've worked?
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Adam Cohen0:31
I think the biggest issue is access to data and the organization of data. The real estate industry needs to catch up with what's happening outside the real estate industry in terms of data management and analytics, which is recording transactions in a way that are not only important for SEC reporting but also for the myriad of tax reporting. What makes that challenging in the real estate industry is two factors. Most real estate companies run lean and mean. We don't have layers of people that are necessary to implement these kinds of changes, and of course the budget to go with it. We also run very bespoke transactions. Our transactions are always different; each lease is different, each lease has a nuance. So in speaking with many of my colleagues here at this conference, we all struggle with the same thing: we're working very manually in a very automated environment. At the same time, we are starved for resources at the lower level. So I'm not only the Senior Vice President of Tax; my right hand is also a Senior Vice President. We're a very experienced group. There's no one in my group with less than 18 years of experience. Bringing in young people and trying to train them in a very complex world is almost impossible. So those are the types of challenges that we find broadly in the real estate and the REIT area: gaining that expertise and having the data so that we can use things like AI and other automation to eventually do things like REIT testing, computing taxable income, and computing the various adjustments that we have.
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Interviewer2:11
L-TIP as a broad term for long-term incentive plan. When the REIT world refers to L-TIPs as opposed to option plans or restricted stock units, what are they generally referring to?
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Adam Cohen2:23
So generally, they're referring to profits interests in the operating partnership as L-TIPs. Some partnership folks think of it as profits interest, and from the REIT world, it somehow got branded as L-TIP, which is long-term incentive plan. But that might include restricted stock units or options. Very few REITs use options because REIT growth is very long-term, very steady state, so few people go into options where the difference in price between what they were issued at and what they might vest at over a two- or three-year period is not that great. So accordingly, restricted stock is more common. My colleagues share with me that it's about 50/50. And generally, the L-TIP that is the operating partnership profits interest could have favorable treatment. Generally, it's the upper levels of the organization, the more sophisticated executives, who can get K-1s and file in multiple states. Or the operating partnerships use composite returns if those executives don't have income from other sources in those other states that the REIT might be doing business in.
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Interviewer3:39
And finally, do REITs use both L-TIPs and restricted stock units as part of their long-term incentive plans?
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Adam Cohen3:44
Typically, typically they do. As I mentioned before, the senior executives tend to be more on the L-TIP side, and the more junior employees and junior executives will tend to take restricted stock. Some REITs may offer an option of choosing one or the other, and a person can make that choice for themselves as to what they think is a better or longer term incentive for them.
