REIT Spinoff Transactions: What To Do Now

The recent passing into law of the Protecting Americans From Tax Hikes (PATH) Act has dealt a significant blow to the ability of most companies to undergo tax-free REIT spinoff transactions, says Alvarez & Marsal managing director Tyler Horton.

Tyler, who will be moderating the Rockville Pike panel at Bisnow's Montgomery County State of the Market on Feb. 17 adds that it is unfortunate that some of the scrutiny from the general public and/or lawmakers surrounding nontraditional REIT spinoffs may be based upon a flawed perception that such transactions are an unfair abuse that must be curbed to preserve tax revenues. Corporate taxpayers in real estate-intensive industries are now severely limited in their options to maximize shareholder value through REIT conversion transactions because of the PATH Act and its misguided political spin.

In light of this, Jeff recommends that owners with a sizable real estate component to their traditional operating businesses consider alternative means of developing real estate on their own balance sheet and alternative means of unlocking the value of the real estate they already own. This may include additional use of joint ventures, transactions with existing REITS or other tax-exempt entities and, in certain instances, the use of captive REITs, among other alternatives. For more information on our Bisnow partner, click here.

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Alvarez & Marsal Taxand, an affiliate of Alvarez & Marsal (A&M), a leading global professional services firm, is an independent tax group made up of experienced tax professionals dedicated to providing customized tax advice to clients and investors across a broad range of industries. Its professionals extend A&M's commitment to offering clients a choice in advisors who are free from audit-based conflicts of interest, and bring an unyielding commitment to delivering responsive client service. A&M Taxand has offices in major metropolitan markets throughout the U.S., and serves the U.K. from its base in London.Alvarez & Marsal Taxand is a founder of Taxand, the world's largest independent tax organization, which provides high quality, integrated tax advice worldwide. Taxand professionals, including almost 400 partners and more than 2,000 advisors in 50 countries, grasp both the fine points of tax and the broader strategic implications, helping you mitigate risk, manage your tax burden and drive the performance of your business.To learn more, visit www.alvarezandmarsal.com or www.taxand.com

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