H&R Real Estate Investment Trust T.HR.UN

Special div Dec 31

[deornoth667]

So they announced a special dividend of .73 per unit at the close of business Dec 31. But it's payable in extra unit... so doesn't that mean more dilution and the share price will drop accordiningly?

[alkhor]

You should read all the previous posts on this. Everyone gets $0.63 worth of extra units (plus $0.10 cash) but after the units are issued they are consolidated so in the end everyone has the exact same number of units as they did before, No dilution, but you still have to pay tax on the distribution if you hold H&R in a taxable account. What H&R is doing is transfering their tax burden on

[materialsgirl]

A REIT by definition never pays any corporate tax unless their  accountants screw up. All taxable earnings in all REITs are passed on (flow through) to  unitholders all the time. That aspect of the HR process is standard.  It is legal. mat

[alkhor]

Yes, it is legal but is it moral? Taxable earning are usually passed on to unitholders in the form of a special cash distribution at the year end so the REIT has no tax obligation. The practice of issueing phantom shares does not benefit unitholders at all but actually hurts them if they have the units in a taxable account. The winner of this is the REIT, who get to keep their surplus cash

[materialsgirl]

Essentially there is a share consolidation You have 104 shares for example after the special  distribution and after consolidation you have 100  shares. Your proportionate ownership stays the same. There is no such thing as the REIT benefiting  except when unitholders benefit. As owners, we are the "REIT" mat

[CatchTheDip]

Too funny and 100% accurate. We are the REIT, each unit is an equal weight of ownership. If you are upset the REIT is "hoarding" more of the cash and you want some, buy more of the REIT.