Lamar Accomplishes Conversion to REIT, Shares Up a Nickel - Analyst Blog

Lamar Advertising Co. (LAMR) has merged with and into its wholly owned subsidiary, Lamar Advertising REIT Company, thereby accomplishing the ultimate stage in the reorganization of its business operations for qualifying as a real estate investment trust (“REIT”).

This conversion to REIT comes as part of the company's effort to capitalize on a seemingly more favorable tax environment. Following this news that came on Nov 19, shares were up 5 cents during yesterday's (Nov 20) regular trading session.

Generally, investors looking for high dividend yields have historically favored the REIT sector. This is because the U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividends to shareholders.

In a special meeting of stockholders conducted on Nov 17, 2014, Lamar received the nod from its stockholders with respect to this merger. Following that, the merger became effective as of 11:59 p.m., Eastern Standard Time, on Nov 18, 2014, when Lamar Advertising REIT Company was renamed as “Lamar Advertising Company.”

According to the company, due to this merger, stockholders of Lamar's Class A common stock, Class B common stock and Series AA preferred stock automatically became stockholders of Lamar Advertising REIT Company's Class A common stock, Class B common stock and Series AA preferred stock, respectively. Moreover, on the NASDAQ Global Select Market, shares of the Class A common stock will carry on trading under its current symbol, “LAMR.”

As a matter of fact, Lamar operates more than 150 outdoor advertising companies in 44 states of the U.S., Canada and Puerto Rico. In addition, the company has logo businesses in 23 states and the province of Ontario, Canada and more than 60 transit-advertising franchises in the U.S., Canada and Puerto Rico.

Lamar reported third-quarter 2014 earnings of 37 cents per share, which came above the prior-year quarter figure of 18 cents per share, attributable to a notable improvement in revenues and operating income.

Lamar currently carries a Zacks Rank #3 (Hold). Investors interested in REIT industry may consider better-ranked stocks like Cousins Properties Incorporated (CUZ), DDR Corp. (DDR) and General Growth Properties, Inc (GGP). All three stocks carry a Zacks Rank #2 (Buy).