DALLAS, Nov. 8, 2000 (PRIMEZONE) -- Transcontinental Realty Investors, Inc. (NYSE:TCI) announced Wednesday that the company no longer meets the requirements of the Internal Revenue Code to qualify as a real estate investment trust for federal income tax purposes. Previously electing to operate as a REIT, TCI will now be treated as a regular corporation for federal income tax purposes in tax year 2000.
Performing routine third quarter testing of the Internal Revenue Code requirements to qualify as a REIT for federal income tax purposes, Transcontinental Realty determined that it no longer met those requirements. Based on publicly disclosed information, acquisitions of the stock in June, July and August 2000 by entities not previously holding TCI shares caused a concentration of ownership in excess of that permitted by the Code. The Code prohibits five or fewer shareholders from owning more than 50 percent of an entity for it to continue to qualify as a REIT. Under the Code, the company also cannot re-qualify as a REIT for at least five years.
"In a number of instances, operating as a regular corporation is advantageous to Transcontinental and its shareholders. Now TCI can be more opportunistic in acquiring, managing and developing certain assets we believe will produce greater returns on our investment," said Karl Blaha, Transcontinental president. "It allows the company to directly manage its own hotels and to expand those operations, as well as to develop its land holdings," added Blaha.
Transcontinental Realty Investors, Inc., a Dallas-based real estate company, invests in real estate through direct equity ownership and partnerships nationwide.