Company: GMRE
Filing Date: 2025-11-14
Form Type: 424B5
Source: 0001104659-25-112543
Chunk: 116

Company: Global Medical REIT Inc.
Filing Date: 2025-11-14
Form: 424B5
Chunk 116
---
IT or require us to pay tax, we may be forced to dispose of our interest in such
entity. In addition, it is possible that a partnership or limited liability company could take an action which could cause us to fail
a gross income or asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership
or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify as a REIT unless
we were able to qualify for a statutory REIT “savings” provisions, which could require us to pay a significant penalty tax
to maintain our REIT qualification.

Taxable REIT Subsidiaries. A REIT may own
up to 100% of the shares of one or more TRSs. A TRS is a fully taxable corporation that may earn income that would not be qualifying income
if earned directly by the parent REIT. The subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation
of which a TRS directly or indirectly owns more than 35% of the voting power or value of the securities will automatically be treated
as a TRS. We will not be treated as holding the assets of a TRS or as receiving any income that the TRS earns. Rather, the shares issued
by a TRS to us will be an asset in our hands, and we will treat the distributions paid to us from such TRS, if any, as income to the extent
of the TRS’s earnings and profits. This treatment may affect our compliance with the gross income and asset tests. Because we will
not include the assets and gross income of TRSs in determining our compliance with the REIT requirements, we may use such entities to
undertake activities indirectly, such as earning fee income that the REIT rules might otherwise preclude us from doing directly or through
pass-through subsidiaries. Overall, no more than 20% of the value of a REIT’s assets may consist of shares or securities of one
or more TRSs.

Several provisions of the Code regarding the arrangements
between a REIT and its TRSs ensure that a TRS will be subject to an appropriate level of U.S. federal income taxation. For example, a
TRS is limited in its ability to deduct interest payments made to its parent REIT. In addition, a REIT will be subject to a 100% penalty
tax