Life Time Fitness Proposes REIT Spinoff
Life Time is the latest, but hardly the last, company with a real estate footprint to take advantage of the REIT structure. The company is considering converting its 112 fitness centers throughout the country into a REIT, though it gave little indication of when, how much or even if it planned to follow through.
Ever since the Internal Revenue Service blessed CBS’ proposal to convert its outdoor advertising subsidiary, CBS Outdoor Americas, into a REIT earlier this year other companies have followed suit with one unorthodox proposal after another. While the business case for a REIT spinoff makes sense – it is a better tax structure, separating out certain assets usually results in better management, economies of scale and improved yield – research from SNL Financial suggests that, at least in the short-term, shareholders don’t come out ahead.