Tomahawk, WI 04/25/2014 (Basicsmedia) – Baton Rouge billboard giant, Lamar Advertising Co (NASDAQ:LAMR) has got permission from the Internal Revenue Service (IRS), which will allow the company to convert and operate as a real estate investment trust.

This conversion is to be effective as of January 1, 2014. A part of this process will involve merging of the company as a new, completely owned subsidiary. Shareholder of Lamar will also need to approve of such a merger.

Following the announcement, which seems like a good one for the company, Lamar Advertising Co (NASDAQ:LAMR) shares took a rise, but dropped back again later.

Lamar looks ready

To comply with real estate rules, an internal corporate restructuring of the company was necessary. Lamar has made efforts and made sure that this was carried out. In fact, real estate investment trusts do not need to pay corporate taxes on profits provided they give away 90% of it to the shareholders.

Lamar Advertising Co (NASDAQ:LAMR) had been waiting for this clearance from IRS since November 2012. Generally, this process takes about 3-6 months.

The shift to REIT allows companies to allow excess cash to shareholders, avoid certain federal taxes and also increase the value of their stock. The company had said in back in 2012 that it generates a lot more cash than it actually needs and thus, a REIT would be the right way to distribute this cash to the shareholders. Shareholders, on the other hand, need to pay income tax on the dividends they receive from the company.

Future expectations

As Lamar Advertising Co (NASDAQ:LAMR) goes REIT, it expects a net income in the range of $268.7 to $278.3 million, in 2014. This works out to around $2.81 to $2.91 per share, and annual dividends per share around $2.50.

The company also plans to spend $100 million in capital expenditures in this present year, of which $45 million will to acquire new assets and the remaining $55 million will be used for operating equipment and maintaining assets.

Lamar Advertising Co (NASDAQ:LAMR) was founded in 1902 and operates as an advertising company, has logo businesses and over 60 transit advertising franchises in the U.S., Canada and Puerto Rico. It has 144,000 billboards, 1,900 digital displays and 34,000 transit displays.

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