American Tower said Friday it has been subpoenaed by the Securities and Exchange Commission (SEC) for access to tax documents dating from 2007 to present.
American Tower is in the midst of converting itself to a real estate investment trust (REIT) in an attempt to reduce its future tax burden. The company’s stock dropped nearly 6 percent on the New York Stock Exchange after news of the subpoena broke Friday, but has since rebounded slightly, rising just over 1 percent in early trading today.
American Tower did not specify what tax information the SEC sought, only stating that it “intends to cooperate fully with the SEC with respect to its request.” The SEC declined to comment.
The company warned investors in May that its attempt to convert to a REIT might not withstand scrutiny from federal regulators like the SEC, saying it “could suffer adverse tax or other financial consequences if taxing authorities do not agree with our tax positions.”
Converting to a REIT would allow American Tower to slash its corporate income tax, but all REITs are required to pay out 90 percent of taxable profits to investors. If American Tower’s attempt to convert to a REIT passes muster with regulators, the company plans to pay out up to $200 million to shareholders in the fourth quarter of this year.
Real estate investment trust is a designation reserved for companies that invest in real estate. As a cell tower operator with more than 37,000 cell sites around the world, American Tower has invested a considerable amount of capital in real estate.
Filed Under: Industry regulations
