If becoming a REIT is such an attractive alternative for integrated forest products companies, why not implement imediately?

Implications: Okay so now you decide to form a REIT.  What are the rules and regulations which must be followed to convert our timberlands to a REIT?   1.  The 100 owner rule states that there can be no more than 100 owners,  and one individual owner cannot have more than 9.9% of the shares of the REIT.   2.  75% of the income of the REIT must be real estate and timberlands operations and 90% of this income must be returned to the shareholders 3.  No more than 5% of the REITs income can be based on nonqualified operations   4.  Timing issues that need to be kept in mind.  The largest time issues involved the creation of the REIT is the title work to be done for all the properties.  At some point in the process all of the land legal descriptions need to be moved to the new entity.  Many of the counties in the South have put their tax data online, but for the counties that do not have online retrieval,  many hours will be spent at the courthouse.

Analysis: So now we've completed our examination of the rulings for REITs, the timing issues for REITs and and formation of a timber supply agreement( TSA)  with the new owner of the timberlands.  The outcome of the negotiations on the TSA can be important to the final value of the REIT itself.  Tax issues need to be mitigated through the use of carefully structured partnerships to reallocate capital gains and or use of other instruments such as the reverse Morris Trust, which was employed by Plum Creek and the GP'S timber company to form a REIT encompassing Georgia-Pacific's former land-base. 

Topic for another day would be the tax implications in more detail and what other options are available such as timber relief ltax legislation or privatization of timberlands.