|
REIT reform bill unveiled
|
 |
March 26, 1998: 7:40 p.m. ET
Lawmakers aim to reduce use of so-called 'paired-share' tax structure
|
NEW YORK (CNNfn) - A bipartisan group of lawmakers Thursday introduced joint legislation designed to limit the tax-exempt status of certain real estate investment trusts.
The proposal addresses the so-called "paired-share" tax structure which were created under the Tax Reform Act of 1984. Since then, a small handful of REITs have been grandfathered to both own and operate their properties, reducing their tax liabilities.
The tax structure came under a considerable amount of scrutiny last year when REITs, such as Starwood Lodging Trust and Patriot America Hospitality Inc., were able to use the tax status to free up cash flow in order to help finance acquisitions.
Hilton Hotel Corp. Chief Executive Stephen Bollenbach -- who lost the highly publicized battle with Starwood for ITT Corp. - and Marriott International Inc.'s founder J.W. Marriott Jr. have been among the most vocal executives against the paired-share status.
Under the proposed legislation, REITs would no longer be allowed to use the tax-exempt status to finance acquisitions and expand the grandfathered property. The rule would apply to all transactions after today but would gradually take effect under certain circumstances.
The bills were sponsored by Rep. Bill Archer (R.-Tx.), who chairs the House Ways and Means Committee; and Sens. William Roth (R.-Del.), chairman of the Finance committee, and Daniel Patrick Moynihan (D.-N.Y.), the committee's ranking democrat.
The sponsors called the legislation "a moderate and fair approach" to squelch complaints of unfair competition.
The Clinton Administration has already expressed its support for the legislation as part of a package to increase sources for new revenue.
-- by staff writer Robert Liu
|
|
|
|
|
 |
|
