The Securities and Exchange Commission (SEC) issued American Tower Corp. (AMT) a subpoena seeking tax-related documents dating from 2007 to current financials. This is in the midst of a company push to change its corporate status in a manner that should reduce taxes in the future by converting itself to a real estate investment trust (REIT).
A REIT trust is a specialized designation reserved for companies that invest in real estate. While it’s true that American Tower has invested a considerable amount of capital in real estate, witnessed by its more than 37,000 cell sites globally, it remains to be seen if AT will receive the designation by federal regulators and is a likely reason for the investigation.
American Tower (AT) is one of the largest owners and operators of cell sites, which it rents out to mobile carriers and telecoms. It wasn’t clear what the SEC was seeking outside of tax accounting and reporting documents. The SEC has declined comment and AT officials have only stated that the company “intends to cooperate fully with the SEC with respect to its request.” AT’s stock saw a 6% drop on Friday before a quick rebound the same day.
Officials from AT told investors in May that attempts to convert to a REIT could cause problems from federal agencies by stating that AT “could suffer adverse tax or other financial consequences if taxing authorities do not agree with our tax positions.”
Switching to a REIT allows companies such as American Tower the ability to drastically cut corporate income tax. However, REITs are required to shell out 90% of taxable profits to investors. If the company is successful in converting, it will have to pay upwards of $200 million to shareholders in the fourth quarter of 2011.
Would you like all your dreams to come true? Follow Marc Speir on twitter @truthorcon.
