Federal Realty Investment Trust (NYSE:FRT)plans to reorganize into an umbrella partnership real estate investment trust, or UPREIT.
Under the new structure, a new holding company would become the publicly traded parent, while the current REIT would convert to a limited partnership controlled by the holding company.
"This reorganization will align our corporate structure with the majority of other REITS and improve our ability to acquire properties in tax deferred structures, all without any impact to our existing shareholders, lenders and other constituencies," Federal Realty CEO Donald Wood said.
Under Maryland law, the reorganization doesn't require shareholder approval and will qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended, meaning that Federal Realty's (FRT) shareholders won't recognize gain or loss for federal income tax purposes as a result of the reorganization.
Also, the change in structure won't affect the payment of common or preferred share dividends declared by the company's board and payable on Jan. 18, 2022.
The reorganization is expected to be effective as of Jan. 1, 2022, and the conversion of the existing Federal Realty (FRT) to a limited partnership is expected to be effective on Jan. 4, 2022.