Amit Verma


Real Estate Investment Trust, which originated in 1960, gained popularity since 1991, when a large number of real estate companies went public. Paired Share structure, has been underscored throughout this thesis, as the whole research was limited to few companies named Starwood, Patriot American, Meditrust, and First Union who used this structure aggressively to acquire corporations. Paired Share REIT Structure refers to the REIT and a C-corporation being traded together under one symbol in the stock market. So, the investors get the combined profits from both the companies, which makes this structure extremely popular among the shareholders. Paired Share REIT Structure was abolished in 1984 because of the abuse of tax system. But the government allowed 5 existing Paired Share REITs to continue. This grandfathered status gave this five companies an advantage over all other REITs as well as non-REITs. Therefore, the only way to become a Paired Share REIT was to acquire one of these five existing Paired Share corporations. This study is strictly a Finance Topic, which discusses cognitive dissonance between REITs with Paired Share structure and REITs with no Paired Share structure as well as non-REITs. As this topic needs a highly specialized knowledge, therefore the size of the survey population was selected to be small. The questionnaire was designed with the assistance of Mr. Todd Dunda, Director of Finance for Marriott International. The survey was conducted in August 1999, administrated to Real Estate Analysts, Finance Officials working with REITs and non-REITs and the data was finally analyzed one question at a time in a very streamlined fashion by projecting coherent grouping of the answers by all the candidates. Marriott International and Hilton Hotels raised their voices when they saw Starwood Hotels winning the bid on ITT Sheraton Inc. Starwood raised $13.3 billion through their paired share structure. Hilton, who could only raise $8.3 billion lost the battle. This study took more than one year, as I was waiting for the results for the appeal in front of Congress to abolish the Paired Share Structure completely. REIT Modernization Act was introduced in August 1999, which strictly ruled out any more acquisitions under a Paired Share Structure. The companies could maintain their Paired Share formats, but they were not allowed to acquire companies. The Share Prices for these Paired Share Companies fell down by more than 50%. Patriot American was close to Bankruptcy. Starwood managed to survive by converting into a C-corporation. The moral of this story is that Maintaining a Balance Sheet is equally important as expanding your company limits.

Library of Congress Subject Headings

Real estate investment trusts--United States--Forecasting; Real estate investment trusts--United States; Hospitality industry--United States--Mergers--Case studies; Hotel chains--United States--Case studies; Consolidation and merger of corporations--Unite

Publication Date


Document Type


Department, Program, or Center

Hospitality and Tourism Management (CAST)


Marecki, Richard


Note: imported from RIT’s Digital Media Library running on DSpace to RIT Scholar Works. Physical copy available through RIT's The Wallace Library at: HG5095 .V47 1999


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