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CHEVY CHASE, MD-Commercial finance concern CapitalSource Inc. will elect REIT status with the goal of operating under the new category in 2006, pending final approval of the move from its board of directors. As a REIT the company will be free of corporate income tax, provided that it distributes 95% of its taxable earnings to investors. To that end, CapitalSource will payout a special dividend to investors by Jan. 31, 2006, meeting the major condition of REIT status.

"To our minds, this is the most efficient corporate structure in which to operate our business because it allows us to hold a significant portion of our assets in a more tax-efficient manner," CapitalSource chairman and CEO John Delaney says. "CapitalSource intends to continue to grow all of its current asset-based, corporate finance and real estate lending products while also expanding into complementary lines of business."

Operating under the assumption that business growth will continue to be robust and that the company will see further success as a result of its REIT status, CapitalSource has estimated that it will payout dividends of $2.15 per share in 2006 and $2.90 in 2007.