After the 721 conversion takes place, investors own OP units which are essentially shares, in the entire REIT, which includes all the properties in the REIT’s portfolio. The REIT intends to 1031 exchange any selling properties so if there is a particular original property that sells it shouldn’t necessarily trigger taxes for you. Of course, there could be the minute risk that the REIT sells your exchanged property (without exchanging) and creates a tax event but I haven’t seen this yet in any of my clients’ REITS over the last 20 years.
These are typically perpetual life REITs that grow in size and continue to acquire assets that meet the investment criteria. These REITs sell very few assets and typically exchange when they do sell.
It is possible that clients can stay in the REIT phase for several decades, collecting distributions and experiencing virtually no capital gains events unless she chooses to sell shares.