Today, Crown Castle International Corporation announced that they were taking the necessary steps to reorganize as a Real Estate Invest Trust (REIT) for tax purpose. They are hoping to begin this status at the start of January 2014.
"We are delighted to announce this plan for conversion because we believe REIT status is the optimal structure for our business given the real estate nature of our assets," stated Ben Moreland, Crown Castle's President and Chief Executive Officer. "We believe a REIT structure will lower our weighted average cost of capital and provide additional opportunities for creating long-term shareholder value. Further, we expect our conversion to a REIT to have little to no effect on our operations, and we intend to continue our focus on maximizing long-term adjusted funds from operations per share through growth and disciplined capital allocation."
In 2012 American Tower reorganized into a REIT and they have been growing ever since. REITs have become a popular choice for many companies due to the large tax benefits. “The law mandated that real estate investment trusts pay out no less than 90% of their income to their investors as taxable dividends. REITs in turn got to exempt that income from corporate taxes,” Forbes explained.
Crown Castle expects to operate in compliance with REIT standards by January 1, 2014. The implementations to these steps will be subject to shareholder approval and final board approval.