In recent years, there has been a considerable expansion of the types of companies holding non-traditional real estate assets that have elected to become real estate investment trusts for US federal income tax purposes (“REITs”). Companies considering becoming REITs have been able to receive private letter rulings (“PLRs”) from the US Internal Revenue Service (the “IRS”) confirming that their non-traditional assets qualified as real estate assets that may be owned by a REIT. This recognition of the different types of non-traditional real estate assets that may be held by a REIT, along with liberalization of the rules governing “taxable REIT subsidiaries” (which are corporate subsidiaries of REITs that operate businesses and hold assets that are not REIT-eligible), has encouraged many C corporations (corporations taxed under the standard corporate tax provisions of the US Internal Revenue Code of 1986, as amended (the “Code”)) to convert to REITs. Other companies with assets eligible to be held by a REIT have considered undertaking tax-free spin-offs of such assets into REITs.

However, some companies considering becoming REITs had been facing uncertainty after the IRS suspended issuing PLRs as it undertook a review of what are qualifying “real estate assets” (as described below) under the REIT rules. In early June, three companies, Iron Mountain Inc., Lamar Advertising Co. and Equinix Inc., announced in filings with the Securities and Exchange Commission (the “SEC”) that the IRS had suspended the consideration of their PLR requests. This created uncertainty regarding whether the IRS was changing its view on qualifying real estate assets under the REIT rules. This concern was attributable to the fact that Lamar Advertising and Equinix were seeking PLRs with respect to categories of assets that the IRS had previously confirmed were qualifying real estate assets. On November 15, the three companies announced in SEC filings that the IRS had again resumed work on their PLR requests.