Starwood Hotels & Resorts failed to win changes it sought in legislation that would alter its corporate structure and crack down on the tax advantage it enjoys, House Ways and Means Committee Chairman Bill Archer (R-Texas) said Tuesday.
Archer and his Senate counterpart, Finance Committee Chairman William Roth (R-Del.), joined forces with the Treasury Department in March to devise a plan to restrict the right of four U.S. paired-share real estate investment trusts to shield new acquisitions from taxes. The four are Starwood, Patriot American Hospitality Inc., Meditrust Cos. and First Union Real Estate Equity & Mortgage Investments.
Phoenix-based Starwood has been urging lawmakers to make last-minute revisions in the plan to preserve the company's unusual corporate structure, which allows certain REITs to join with a management company in a paired-share arrangement, with the two entities trading under a single stock listing.
Starwood hired some of the top tax lobbyists in Washington to plead its cause. Although the effort fell short, Starwood said the legislative change won't affect the company's profitability.
Still, the company will have to alter its operations to comply with the changes. Starwood spokesman Jim Gallagher said the company has already chosen a new structure. He declined to describe the corporate change.
The change is likely to become law because Archer and Roth have attached the crackdown plan to a popular bill that would overhaul the Internal Revenue Service.