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REIT Portfolio of Billboards?

Signs are beginning to point to yes for a potential billboard REIT. Those tiny pieces of real estate are receiving some extra attention from a REIT hopeful.

CBS Outdoor (the Company), a business segment of CBS Corporation, recently announced that it may be able to convert to a REIT. The news came in the form of a favorable private letter ruling from the IRS.

The Company is one of the largest lessors of advertising space on out-of-home advertising structures. Its portfolio is mainly comprised of billboard displays in densely populated metropolitan areas, high-traffic expressways, and along major commuter routes. As of September 30, 2013, the Company had approximately 329,100 displays in the United States and approximately 26,100 displays across Canada and Latin America.

Billboards do not fit into the major categories that most REITs deal in, whether traded or non-traded. However, a REIT structure can be beneficial when it comes to the amount of tax a company must pay. Other unusual REIT property types could include timber, cellular towers, golf courses, data centers, prisons, and others.

Earlier this month, the CBS Outdoor completed its IPO of 19% of its shares on the NYSE. CBS had announced earlier this year its plans to divest its 81% of CBS Outdoor’s common stock through a tax-free split-off later this year. Following that, the Company intends to elect and qualify as a REIT.

“CBS Outdoor’s conversion into a REIT will unlock its true value, and the completion of our Outdoor initiatives will enhance our ability to return capital to our shareholders,” said Leslie Moonves, President and Chief Executive Officer of CBS Corporation. “We’re very pleased with the way CBS Outdoor has launched as a public company, and with this favorable IRS ruling, we look forward to great success in the future.”