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Now That Spinoffs Are Banned, What's Next For The US REITization?


REIT loopholes are going by the wayside—spinoffs have been banned, and now REITs can't get federal funding through captive insurers. So what’s on the horizon for REITs?

One clue: MGM Resorts’ creation of MGM Growth Properties. Instead of a stand-alone REIT spinoff, the hotel giant put properties into a subsidiary to allow investments by third-party investors in its real estate.

The move requires no IRS approval so it gets around the REIT-banning PATH Act while still letting the company monetize its property. And others, like Macy's, could follow this approach, GlobeSt reports.

A Fitch Ratings report shows companies may hold off on REITs and look towards alternatives like MGM's, with the newly rising interest rates and volatile debt market putting pressure on real estate value. [GS]