Question on legal structure of real estate firms
I'm a Finance PhD Student studying real estate, and I just wanted to get some insight on why real estate firms tend to organize their holdings in such a way that they're owned by subsidiaries of the firm.  For instance, say a real estate firm owns three buildings; however, legally those buildings are owned by Building A, LLC, Building B, LLC and Building C, LLC.  These three LLCs are all owned by the real estate firm.

From my own work experience I think this is mostly because it protects the firm in the case that the cash flows from the property no longer cover debt service, but is there anything else I'm missing here?
[{"id": "e6hrgsn", "text": "Shielding liability. If one property gets sued, the others are not exposed. \n\nAnother potential is equity structure. Three different properties may have different equity partners so each property has its own entity. ", "replies": [], "depth": 1}, {"id": "e6hta1x", "text": "[This article](https://bankruptcy.cooley.com/2010/02/articles/business-bankruptcy-issues/whos-sare-now-bankruptcys-single-asset-real-estate-rules-and-their-impact-on-commercial-real-estate/) might provide more detailed background.\n\nMany commercial real estate lenders will require borrowers to hold the collateral property in a single purpose entity to keep it bankruptcy remote from the rest of the borrower/sponsor's world. It makes it easier for the lender to get access to the collateral through foreclosure.", "replies": [{"id": "e6hx2f1", "text": "This is the most correct answer, that it\u2019s easiest for the lenders to untangle a single special purpose llc. Also: different investors, cross liability, lawsuits and things of that nature. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "e6htpvm", "text": "It's common for a sale to transfer the LLC ownership in which the asset resides. ", "replies": [{"id": "e6hugrp", "text": "That interesting i didn\u2019t know that. So in this case if one company sells an asset to another company by transferring the LLC, how does the sale get reported? Because in that case (correct me if I\u2019m wrong) the owner of the actual real estate asset doesn\u2019t change, just the owner of the LLC right?", "replies": [{"id": "e6hwycs", "text": "This is precisely why they might do it, usually to avoid \u2018excess\u2019 government interference in the way of renewing licenses, contracts, or say hiding a purchase price to keep the tax assessment low.", "replies": [], "depth": 3}], "depth": 2}, {"id": "e6i34j9", "text": "Transferring ownership of the legal entity means the buyer takes on any the liabilities. i.e. liens, environmental, etc.  In my experience its a rare occurrence because of the liability issues.  \n\nDisclaimer:  I\u2019m speaking based on my experience, but I\u2019m not an attorney so this is not be viewed as legal advice.  ", "replies": [], "depth": 2}, {"id": "e6ii2i7", "text": "I work a lot nationally, and I know for a fact this is popular when a state reassesses taxes in the event of a sale. (California, Florida, Georgia come to mind immediately, I\u2019m missing a few more). Also, it\u2019s common when a RE company buys another RE company in its entirety, essentially a large portfolio sale but legal costs could be cheaper to maintain the LLC ", "replies": [], "depth": 2}], "depth": 1}, {"id": "e6hx2q7", "text": "There's also taxation considerations. The holding company can be taxed as an s Corp in some situations to lower the tax burden. This is done more with small companies. ", "replies": [], "depth": 1}, {"id": "e6j1hvv", "text": "Most of these answers are partially correct. The reality is LLCs provide single entities (in the instance a single building purchased by an LLC) to get all of the liability protection a corporation has ( C or S corps) while also giving the LLC's  members 100% pass through income. The NOI that passes through the LLC to the members is taxed at the individual recipient level rather than at the corporate level AND the individual level.  LLCs eliminate the issue of double taxation as long as  proceeds are actually passed through the entity.  I strongly recommend you consult a real estate tax attorney - s/he can explain this is a very brief conversation. It's pretty basic stuff. ", "replies": [], "depth": 1}]