For Immediate Release
April 29, 1999
Laura Armstrong or Jay Hyde
REIT MODERNIZATION LEGISLATION INTRODUCED IN HOUSE
Measure Has Backing of Entire REIT Industry
Washington, D.C. -- Legislation to modernize the tax rules governing real estate investment trusts (REITs) by authorizing the limited use of taxable REIT subsidiaries has been introduced in the U.S. House of Representatives. The measure is sponsored by U.S. Representatives Bill Thomas (R-Calif.) and Ben Cardin (D-Md.) and 30 other Members of Congress, including two-thirds of the Ways and Means Committee.
The Real Estate Investment Trust Modernization Act of 1999 -- H.R. 1616 -- is similar to a proposal included in the President's Fiscal Year 2000 budget and has the support of the entire REIT industry, according to Steven A. Wechsler, President and Chief Executive Officer of the National Association of Real Estate Investment Trusts® (NAREIT). Identical legislation is expected to be introduced in the U.S. Senate soon.
In a letter to House colleagues, Thomas and Cardin stated that there are a number of constraints in current law that unreasonably restrict REITs' ability to maximize services to their tenants and other customers. "The legislation we are introducing would remove these artificial impediments to REIT activities," the legislators wrote. "It would permit REITs to establish taxpaying REIT subsidiaries that could provide noncustomary services to tenants and services to third parties who are not tenants."
"The Administration has acknowledged that unless taxable REIT subsidiaries are allowed greater flexibility, REITs will be at a competitive disadvantage to others in the real estate marketplace," Wechsler remarked. "This legislation would enable REITs to evolve while ensuring that they remain real estate oriented."
H.R. 1616 also would conform a REIT's distribution requirement to the 90% standard applicable to mutual funds and would provide health care REITs more flexibility to line up operators of health care facilities in certain circumstances.
The measure also has the support of the National Association of Realtors, International Council of Shopping Centers, the Mortgage Bankers Association of America, the National Apartment Association, the National Multi-Housing Council, National Association of Industrial and Office Properties, the American Resort Development Association, the American Seniors Housing Association and the National Realty Committee.
"The publicly traded real estate industry commends Congressmen Thomas and Cardin for their leadership on this important issue. And we encourage their colleagues to join them as cosponsors," Wechsler added.
For more detailed information on The Real Estate Investment Trust Modernization Act of 1999, visit the Government Relations section of www.nareit.com.
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The National Association of Real Estate Investment Trusts® (NAREIT) is the national trade association for real estate companies. Members are real estate investment trusts (REITs) and other businesses that own, operate and finance income-producing real estate, as well as those firms and individuals who advise, study and service those businesses. Visit our web site at www.nareit.com.