US telecommunications company
Windstream Holdings' spin off of assets into a publicly traded
real-estate investment trust (Reit) marks the fourth
tax-free Reit spin-off in less than two years. More are in the
pipeline, but the regulatory barriers to conversion mean the
structure only makes sense for certain companies.
Windstream Holdings will spin off its fibre and
copper networks, as well as other real estate, into a Reit.
This will lease use of these assets back to Windstream through
what is known as an opco-propco structure.
"These deals couple a corporate spin-off that takes
one company and divides it into two with a Reit conversion
where a company converts from a regular operating company into
a reit," said Neil Barr, a tax partner with Davis Polk &
Wardwell in New York.