Lanesborough Real Estate Investment Trust V.LRT.UN

RE:RE:RE:ISN'T IT TIME FOR LANESBOROUGH TO ANNOUNCE

[alkhor]

"Not to sound negative, but why would you put this in to a tax sheltered account?"

In the past number of years LREIT has issued a phantom distribution of units which, after issueing did a consolidation of the units so you ended up having the exact same number of units as you did before the distribution. In a tax sheltered account there was no effect, you never saw anything happen.

In a taxable account you still had the same number of units, but in March you would receive a T3 form showing a distribution income equal to the value of the distribution, even though you received nothing. That means you had to pay tax on that distribution at your highest tax rate. The REIT did this so it would not have to pay any taxes per the CRA rules. Amazingly, when they announced the spaecial distribution, the stock price went up as investors did not realize they were buying the tax liability. They did not do this for 2022.

LREIT started this "scam" quite a few years ago and, because they gat away with it, other REITs have follows suit, Artis and H&R being two I can think of offhand. The big difference is the other REITs issued part of the distribution in cash to offset the higher tax bill.

The conclusion is: never hold a REIT in a taxable account at the end of the year or you could get burned.