La Quinta Converts To C-Corp.

DALLAS— La Quinta Cos. said its board approved a new corporate structure under which it will convert to a C-corporation with La Quinta Properties Inc. as its real estate investment trust subsidiary, and will take a non-cash $400 million charge. La Quinta said recent changes in federal tax laws have severely restricted the activities of “grandfathered paired share REITs and limited La Quintas ability to grow its lodging business. Without the restructuring, the companies will be unable to continue to qualify as aREIT in the future. The Dallas-based company said the measure still needs shareholder approval and that it will take a $400 million noncash charge in connection with the move. Ultimately, La QuintaProperties will become a subsidiary of La Quinta Corp., the company said. The nonrecurring charge will consist of about $230 million in deferred tax liabilities, and $170 million of intangible write-offs. In addition, La Quinta will reclassify $200 million of preferred equity to minority interest. The company said the restructuring will be “transparent to shareholders, who will exchange current securities for new securities.