REAL ESTATE

Investment Incentive: The Orange County real estate industry may actually get a boost from President Clinton’s tax strategy--especially those firms trying to raise money by forming real estate investment trusts.

Michael Meyer, managing partner of the Newport Beach office of accounting firm Kenneth Leventhal & Co., says some of the new provisions not only indicate a more understanding view of the real estate industry but also include a change in rules governing REITs, as they are commonly called.

Used by developers to raise cash, REITs are a type of real estate investment in which ownership shares in real estate or mortgages are sold. Most of the income is passed on to shareholders, so it is not taxed at the corporate level.

Under previous rules, pension funds, with billions of dollars to invest, were prohibited from owning large chunks of REIT stock. However, the new rules will allow real estate companies to “form a private REIT with a pension fund, acquire properties and then have a public stock offering,” Meyer said. “This is a significant source of new capital that will assist in stabilizing the value of Orange County properties.”