Starwood Hotels to Change Structure

Starwood Hotels & Resorts, the world’s largest owner of hotels, said it will announce a new corporate structure today, in response to new legislation taking away a tax advantage it had enjoyed. White Plains, N.Y.-based Starwood, owner of the Sheraton and Westin hotels and Caesars World casinos, is likely to convert from a real estate investment trust into a traditional corporation, analysts said. It is now one of four companies structured as a so-called paired-share REIT. The new tax law bars the paired-share REITs from putting future acquisitions within their tax-advantaged structure. For Starwood, 1997 was a record acquisition year, with its leading buy being the $14.6-billion purchase of ITT Corp., for which it outbid Hilton Hotels Corp. Like other REITs, the paired-share variety can shelter income from taxes so long as they pay out most of their earnings as dividends. Unlike other REITs, which are restricted to passive real estate investments, paired-share REITs can operate the businesses that occupy the buildings they own.