Hilton Worldwide Asked IRS OK For REIT Spinoff: WSJ
BY CIARAN MCEVOY, INVESTOR'S BUSINESS DAILY
05:39 PM ET
Hilton Worldwide (NYSE:HLT) reportedly plans to spin off its vast hotel properties into a real estate investment trust, sending its shares up more than 5% Wednesday.
The hotel chain has sought permission from the Internal Revenue Service for the REIT transaction, according to the Wall Street Journal. The spinoff could be formally announced early in 2016, WSJ reported.
Shares climbed 5.2% to 22.45 on the stock market today.
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Hilton, which owns or leases about 147 hotel properties throughout the globe, would be exempt from federal year-end tax legislation pending in Congress that would prohibit such transactions. The bill, which the House of Representatives is scheduled to vote on Thursday, grandfathers-in companies who sought an IRS ruling for such spinoffs before Dec. 7, WSJ reported. An earlier version of the bill lacked such a grandfather clause.
Hilton hotel properties could be worth more than $10 billion, analysts have estimated. Hilton had said in October that was mulling "potential strategic alternatives" for its real estate.
REITs typically pay lower amounts of corporate tax and usually trade at higher multiples of their earnings than do their parent companies.
Hilton Worldwide Holdings Inc. (HLT) plans to spin off its hotels into a real-estate investment trust, a move that has become popular among casino, restaurant and retail companies looking to slim down and boost their stocks.
Hilton has sought and received the blessing of the Internal Revenue Service for the transaction, which could involve a large chunk of the hotels it owns, according to people familiar with the matter. The spinoff could be announced as soon as early next year, one of the people said.
The company owns or leases 147 hotels around the world. Analysts have said the properties, which include hotels under the Hilton and DoubleTree banners, could be worth more than $10 billion.
By having already gone to the IRS, Hilton would be exempt from pending legislation that would ban such transactions. That bill, which is part of a year-end tax bill that the House is set to vote on Thursday, grandfathers in companies that sought an IRS ruling for their spinoffs before Dec. 7—which Hilton did, the people said. An earlier version of the bill would have prevented the Hilton deal because it didn't have that grandfather clause.
Hilton Chief Executive Christopher Nassetta said on an October investor call that the company was considering " potential strategic alternatives" for its owned real estate and said the company would provide an update when it reports full-year 2015 earnings early next year.
Investors have been clamoring for companies to spin off their properties into REITs. These vehicles pay little corporate tax and typically trade at higher multiples of their earnings than their parent companies.
Richard Rubin and Craig Karmin contributed to this article.
#1 Sunedison Inc (NYSE:SUNE)
Investors with Long Positions (as of September 30): 73
Aggregate Value of Investors’ Holdings (as of September 30): $1.06 Billion
The $1.44 billion developer and seller of photovoltaic energy solution’s acquisition binge has landed itself in considerable trouble as concerns of bankruptcy eroded its market value. So far this year the stock is down by about 70%. However, this might be just the right time to gain exposure to the world’s leading renewable energy developer as the concerns seem to be extremely overplayed. Sunedison Inc (NYSE:SUNE)’s stock recently gained back some ground when the company sold $209 million worth of assets to Terra Nova. In addition the management has reduced workforce, cut off some projects and renegotiated the deal to acquire Vivint Solar (NYSE:VSLR). Hedge funds collectively held about 47% of Sunedison’s outstanding stock at the end of September. During the third quarter the total number of hedge funds having investments in the company shrank by 20 and the corresponding value of these aggregate holdings fell by a whopping 80%. David Einhorn‘s Greenlight Capital holds about 18.61 million shares of Sunedison Inc (NYSE:SUNE) valued at $133.59 million as of the end of September.
Yahoo shows 2106 earnings at 3..36 and trending down.. with 21 analyst having a big range..I am sticking with BX.. Zack just has a mechanical method !!!! upgrades or downgrades just on earning trends...so they have a sell after being up to 44??? New Strong Sell Stocks for December 16th
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I think BX will soon try to monetize this and us shareholders will get a good return...
Sentiment: Strong Buy
I'm firm in my belief that Kinder Morgan will work out as a fantastic long-term investment, and it is a relatively safe company to invest in, even with the short-term volatility of its stock price. But I do regret taking so bold a stance before the company announced a firm commitment on its dividend.
article is not negative.. just attention headlines and someone's agenda ...Expected Interest Rate Hike Impacting Blackstone Credit
they are executing their plan..no insider information here.. Just a good conversation..had only 2 questions asked after presentation... and about 25 people where at the meeting.. And Penna met with many of then one on one...Management is heavily invested with their company and I TRUST they are doing a good job IMHO.. I see a very good potential and the FDA will be the Key..
Sentiment: Strong Buy
In financial stocks news, asset manager The Blackstone Group L.P(BX) has been downgraded by Bank of America to a neutral rating from a buy. Price target information was not available.
Shares in the company were 2.2% lower at $29.75 pre-bell. This is towards the lower end of the stock's 52 week trading range between $28.56 and $44.43
Domenic Della Penna worked for Diageo and then moved to Teva Pharmaceuticals before ending up at a small pharmaceutical company in Canada. He talked about the importance of analytical thinking.
“The difference between being a good accountant and a good analyst is that an analyst can see a story through the data. I always say, ‘Don’t give me data, give me information.’ Unless you can bridge the gap, you’ll be stuck as an accountant.” — Intellipharmaceutics CFO Domenic Della Penna (Pharmaceutical)
Sentiment: Strong Buy
that is why I have you on IGNORE...just seeing the response to Bill..I cant understand why you are on this board???????
Sentiment: Strong Buy