Let's Become a REIT

With US companies struggling to create shareholder value in the "old fashioned way" i.e. through steady growth in revenue and income, they are resorting to financial engineering/machination. It is the world where 2+2>4.

No, I am not talking about LBO (leveraged buyout) or MBO (Management buyout). That's so 80s. I am talking about REIT, Real Estate Investment Trust.

Companies left and right are trying to turn themselves into a REIT.

• Just this week, the solar industry got a big boost (FSLR is up 11% in 5 days) from a report that said one of them is trying to get permission from the IRS to set itself up as a REIT. As Bloomberg reported, A San Francisco startup may win approval as soon as this month to become the first firm allowed to raise money for solar-power projects as a REIT, the financing vehicle used in $640 billion of U.S. property ventures. (Full Story).
• Last week, it was waste management companies that caught the fancy of REIT-crowd. Again, as Bloomberg reported, Waste Management Inc. (WM) rose the most in 17 months after analysts at Credit Suisse Group AG said investors would benefit if the biggest U.S. trash hauler was converted into a real estate investment trust. (Full Story).
• Some non-traditional companies have already turned themselves into REITs such as timber companies,  a casino company (PENN), and a retail company (DDS). I am sure there will be more in the next 12 months.

Investors can benefit, sometime mightily, if they can identify a company that could turn into a REIT before the Wall Street crowd do. PENN jumped over 30 percent on November 16, 2012 after it announced plans to split into a REIT. Good luck!

Read Also:

  Clear Channel Outdoor CEO says no current plan to become REIT (Morningstar, Jan 2013)

  The Rise–and Complications–of “the REIT Conversion” (OpEd, Dec 2012)

  REITs Boom As More Industries Discover This Tax-Friendly Structure (Forbes, Nov 2012)

  Here's a Way to Cut Business Taxes: Tech Firms Become Real Estate Trusts (WSJ, Oct 2012)

  Gabelli investors to oppose Gaylord's proposed REIT conversion (Reuters, Sep 2012)

  Crown Castle, A High-Growth Story That Could Convert To A REIT (SeekingAlpha, Sep 2012)

  REITs demonstrate real appeal in more sectors (The Deal, Aug 2012)

  Firms Restructure as REITs (WSJ, Aug 2012)

  The Risks and Rewards of Becoming a REIT (CFO Magazine, June 2012)

  The Lure of Converting to a REIT (Barrons, May 2012)

  Will CyrusOne Become a REIT? (Data Center Knowledge, Feb 2012)

  REIT Renaissance (NYSE Magazine, Jan 2011)

  Firms see REITs as right move (Pension & Investment, Jan 2011)

  More Institutions Barking Up the REIT Tree (National Real Estate Investor, Aug 2010)

  REITs Spread to Timber Industry (Street Sleuth, Nov 2005)

  Host Marriott Finds Trade-Offs In REIT Conversion (Hotel Interactive, July 1999)

  Tax Benefits of Creating a Real Estate Investment Trust (PDF)

  FAQ: REIT (PDF)

 

  Corrections Corporation of America will convert to REIT in 2013 (Feb 2013)

  CBS converting advertising unit to REIT (Jan 2013)

  Equinix Board Approves Plan to Pursue REIT Conversion (Sep 2012)

  Iron Mountain Rips Higher On REIT Conversion Plan (Jun 2012)

  Gaylord to Convert to REIT, Sell Management Business (May 2012)

  Weyerhaeuser declares record $5.6 billion dividend in conversion to REIT (Jul 2010)

  Host Marriott to announce it's a REIT (Dec 1998)