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How distributions work on the LEX platform

One of the benefits of investing in Commercial Real Estate is generating income via rent payments from tenants. LEX investors receive their proportionate share of rental income from the property when that income is distributed to the other owners of the property. Distributions are not guaranteed. Below are the important details you need to know about cash distributions on the LEX platform.

What is a cash distribution?

A distribution is a cash payment made by a property owner to shareholders. With LEX, investors are pari passu with property owners meaning any cash distribution paid to the owner needs to be paid to LEX shareholders at an equal rate.

How frequently are distributions paid?

Distributions are calculated on a quarterly basis and are generally expected to - but are not required to - be paid quarterly. The owner typically makes a public filing on Edgar announcing or declaring the distribution amount and timing several weeks after the end of each quarter.

How are distributions calculated?

Distributions are calculated at the discretion of the property owner to allow them flexibility in operating the asset. There is no established formula but the distributions are generally derived from the net cash flows of the building after paying current expenses and servicing debt payments on the property. When a property owner pays cash distributions to any owner including themselves, they are required to pay distributions to LEX shareholders at an equal rate.

What are the important dates related to a distribution?

Ex-Date

The ex-date marks the cutoff point for an upcoming cash distribution. If you buy a share in a property prior to the ex-date, you will receive the cash distribution. If you buy on or after the ex-date, you will not receive the cash distribution. The ex date is typically 10-14 days after the announcement or declaration of a distribution. 

To determine the ex-date of a property on the LEX platform, navigate to the key stats section for the specific listing. 

Record date

The date of record is the date in which an agent of the issuer identifies all of its current shareholders, and therefore everyone who is eligible to receive a cash distribution. If you're not on the list, you don't get the distribution. The record date is currently one business day after the ex-date for all LEX stocks (this will change if and when stocks move to a T+1 settlement cycle, currently planned for 2024). 

Payment date

The payment date is the day in which cash is transferred from the property owner to the shareholders of record as of the record date. It is typically 1-2 weeks after the record date. 

You can find these dates in the LEX platform

How are distributions paid to investors?

On the payment date, investors will receive their portion of cash distributions directly in their brokerage account. Payment is facilitated by the issuer’s transfer agent and the Depository Trust Company. 

How will I be taxed on received distributions?

LEX offerings are structured as publicly traded partnerships (PTP). Only a portion of the cash distributed is deemed ordinary income, and you may not owe taxes on the rest of the cash you received until you sell your shares. You will receive a Schedule K-1 at the beginning of each year detailing what portion of the cash you received in the prior year was ordinary income. You should provide the Schedule K-1 to your tax preparer. 

If you have any further questions about the nature of distributions on the LEX platform, do not hesitate to contact us directly at clientservices@lex-markets.com

May 16, 2022

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