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Author: yodaorange Big red star, 1000 posts Feste Award Nominee! Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 77726  
Subject: Threats to REIT status? Date: 10/14/2012 11:13 AM
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Several companies have decided to push the envelope for attaining REIT status. Their main goal is to avoid paying corporate income tax. The Wall Street Journal has the details:[1]


American Tower Corp (AMT) which operates cellphone towers, will save more than $400 million a year by 2017, analysts estimate, thanks to its new tax status as a real-estate investment company. Equinix Inc (EQIX) whose warehouses are full of computer servers, is expected to avoid taxes of around $150 million a year. Iron Mountain Inc (IRM) which helps clients shred documents and store data, may save nearly as much.

"The real-estate companies correctly are nervous about this phenomenon," says Kenneth T. Rosen, a real-estate economics consultant and former manager of a hedge fund that invested in REITs. "The more it looks like a tax loophole, the more likely it is to affect them negatively."

That concern came to the fore last month after Jim Taiclet, American Tower's chief executive, touted the tax benefits of his company's conversion to a REIT in a television interview on business channel CNBC.

"Should we think of you as a real-estate company?" a reporter asked. "You should feel that we're a growth company that's taking advantage of the real-estate trust structure," Mr. Taiclet replied.

UBS AG real-estate analyst Ross Nussbaum warned clients in June that Congress might re-evaluate REIT rules as a wave of "alternative" companies try to reap the structure's tax advantages.

"You have this growing crop of companies who are masquerading as real-estate companies," he says.


[1] WSJ Article "Here's a Way to Cut Business Taxes: Tech Firms Become Real Estate Trusts"

http://online.wsj.com/article/SB1000087239639044465780457804...
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