Walmart Saves Taxes by Paying Rent To Itself

From the you can't make this up department...

In a shrewd move Walmart has set up REITs to own their real estate. According the WSJ, "here's how it works: One Wal-Mart subsidiary pays the rent to a real-estate investment trust, or REIT, which is entitled to a tax break if it pays its profits out in dividends. The REIT is 99%-owned by another Wal-Mart subsidiary, which receives the REIT's dividends tax-free. And Wal-Mart gets to deduct the rent from state taxes as a business expense, even though the money has stayed within the company."

The Great State of NC caught on to this and ordered Walmart to pay $33M in back taxes. Walmart paid up but is sueing for a refund.

Maybe if they used the dough to play the state "education lottery" or agreed to contibute to the Google bribery campaign, NC would let it slide.

You can't make this stuff up. Read the entire story at: http://www.realestatejournal.com/reits/20070205-drucker.html

Wachovia Tower Sold for Record $153.4M

Argus Realty Investors of San Clemente, Calif., paid New York-based DRA Advisors $278 per square foot for the Wachovia Capitol Center in downtown Raleigh on Jan 31 2007.

This record sale signalled that the record setting commercial real estate activity of 2004, 2005 and 2006 is far from over. The previous record was set in 2004, when Regency Centers paid $120 million for Raleigh's Cameron Village shopping center.

A great bullish signal for our market, but average cap rates here 8% are still higher than the national average of 7.1%. That tells me that capital is still going to flow here for the the near future.

Highlights:
$153.4M
550,979 SF
$278/SF
6.5% cap rate
10% vacancy
61% above average class A office sale in 2006
750 space parking deck

Read Jack Hagel's coverage here:
newsobserver.com Sale of Wachovia tower sets record