Weyerhaeuser (NYSE: WY) said Tuesday its board has approved a conversion of the forest products giant into a real estate investment trust, letting the company take advantage of certain tax benefits, according to Associated Press.
The Federal Way, Wash., company said the conversion may occur as soon as next year, depending on the economic recovery and changes in tax policy.
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Weyerhaeuser has been under pressure for years to lower its taxes by becoming a REIT. It said it plans to pay a significant portion of dividends in stock.
REITs distribute at least 90 percent of their taxable income to shareholders as dividends each year. The company then can deduct those dividends from its corporate taxable income. In many cases, REITS will pay out all of their taxable income and owe no corporate tax.
Weyerhaeuser now pays a 35 percent tax on income.
Under its conversion into a REIT, the company must issue shareholders a special, taxable dividend of its earnings by the end of the year of conversion. Weyerhaeuser pegged its 2010 profit at just under $6 billion.
The company also announced it will ask shareholders at its annual meeting in April to approve changes in its structure, eliminating its classified board and removing super majority voting provisions.
In morning trading, Weyerhaeuser shares rose 71 cents, or 1.7 percent, to $43.22. The stock earlier hit $46.80, eclipsing a previous 52-week high of $44.02 set Dec. 3.
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