Weyerhaeuser invokes REIT tax status • Fedeeral Way WA Weyerhaeuser Company on announced on July 10 that the board of directors has declared a special dividend of $5.6 billion. This marks a major milestone in the company's plan to convert to a real estate investment trust (REIT) by distributing its earnings and profits to shareholders. The special dividend includes the regular quarterly dividend of approximately $11 million and is payable to shareholders of record as of July 22, 2010. Weyerhaeuser expects to pay the special dividend on Sept. 1, 2010. Shareholders can elect stock or cash for the special dividend, with the total cash payment limited to 10 percent, or $560 million, of the total distribution. If cash elections exceed the approved amount, shareholders will receive a pro-rata amount of their distribution in cash and the remaining portion in stock. Real estate investment trust or REIT (pronounced reet) is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes. In return, REITs are required to distribute 90% of their income, which may be taxable, into the hands of the investors. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks. Like other corporations, REITs can be publicly or privately held. Public REITs may be listed on public stock exchanges like shares of common stock in other firms. |