Search
 

IRS Ruling Isn't Slam Dunk for Corporate Real Estate

DALLAS-A new IRS ruling is just like the old saying: If it sounds too good to be true, it probably is. Ernst & Young's national director of real estate tax services says it's just for big league players. And, it can't be done just to benefit shareholder value.

By Connie Gore | Updated on June 21, 2001

DALLAS-A new IRS ruling about corporate real estate isn’t for everyone and it’s not a “slam dunk,” Ernst & Young’s national director of real estate tax services tells GlobeSt.com.

It’s also not about saving tax dollars, says Michael Frankel, who is based in Dallas. That is secondary to the ability to strip corporate real estate from the balance sheet for a rosier outlook to gain access to more capital. A corporation attempting the REIT play should plan on spending a minimum of nine to 12 months to structure the tax-free transaction.

“It will be difficult to structure a transaction that meets all the factuals and satisfies all the business needs,” Frankel believes. “It’s clearly the national players that have substantial real estate holdings who should be looking at this.” By national, he means those corporations that have upward of $200 million in real estate holdings, specifically the big boxes and nationwide restaurant chains. Most REITs have portfolios in excess of $1 billion.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.