Federal Realty Investment Trust (NYSE: FRT) today announced that it intends to complete a holding company reorganization (“Reorganization”) that would structure the company as an Umbrella Partnership Real Estate Investment Trust, or UPREIT. In the Reorganization, a new holding company would become the publicly traded parent company while the current real estate investment trust would convert to a limited partnership (“Conversion”) controlled by the holding company.
“This reorganization will align our corporate structure with the majority of other REITS and improve our ability to acquire properties in tax deferred structures, all without any impact to our existing shareholders, lenders and other constituencies,” said Donald C. Wood, chief executive officer.
Under Maryland law, the Reorganization does not require shareholder approval and will qualify as a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended, meaning that Federal Realty’s shareholders will not recognize gain or loss for federal income tax purposes as a result of the Reorganization. The consolidated assets, business, operations and governance of Federal Realty are not expected to change as a result of the Reorganization and the Reorganization is not expected to have any adverse impact on Federal Realty’s consolidated financial condition, cash flow or results of operations. All common and preferred shares of Federal Realty will automatically be converted into identical shares of the new parent holding company as part of the Reorganization, and the Reorganization will not impact the payment of the common or preferred share dividends declared by Federal Realty’s board and payable on January 18, 2022 to shareholders of record on January 3, 2022, all of which will be paid as previously announced.
The holding company reorganization is expected to be effective as of January 1, 2022, and the conversion of the existing Federal Realty to a limited partnership is expected to be effective on January 4, 2022. When the Reorganization is complete, the holding company will be a real estate investment trust named Federal Realty Investment Trust, just as the company is today, and its common shares and Series C depositary shares are expected to continue to trade on the NYSE under the symbols FRT and FRT/C, respectively.