REIT CONVERSIONS may move forward again after the IRS sent an email in November to say that it will resume ruling on what qualifies as “real property” for REIT purposes.

The agency had stopped ruling for the last five months while it studied the issues.

Several companies that own data centers — large buildings with lots of computer banks for storing data — have moved or are considering moving the buildings into real estate investment trusts or “REITs” and then leasing the facilities to an operating company that pays a share of the revenue from users to the REIT as rent. REITs do not pay tax on earnings to the extent the earnings are distributed to their shareholders. The only tax is at the shareholder level. REITs cannot be used for operating businesses and must own largely real property and be careful about the types of income they receive. Rent from leasing “real property” is good income.

The IRS has been receiving many requests lately to rule on cell towers, data centers, billboards and other assets that have not traditionally been owned by REITs. The agency said in the email that it had “temporarily placed pending ruling requests concerning [such] assets . . . on hold to allow for a thorough review to ensure a uniform and consistent approach to addressing the definition of REIT real property based on applicable law.” It said it “has completed its review and is ready to resume ruling on these requests consistent with existing law . . . .”

Some analysts said after talking to the IRS that no change is expected in the agency position that cell towers and data centers can be owned by REITs.