Weyerhaeuser primarily grows and harvests trees, develops residential lots and builds homes, and makes a range of forest products. It manages 22 million acres of forests and generated $8 billion in net sales in 2008. Through the first nine months of 2009 it has generated just over $4 billion in sales, 35% behind the same 2008 period.

"This conversion will position us to be more competitive in our timberlands business," Dan Fulton, president and CEO, said in a statement.

A REIT distributes at least 90% of its taxable income to shareholders as dividends each year and then deducts those dividends from its corporate taxable income. If it distributes 100% of its taxable income it would owe no corporate income tax. Weyerhaeuser's current income tax rate is 35%.

Weyerhaeuser will ask shareholders to approve the conversion in April, which would eliminate its classified board and super-majority voting provisions. In the year it converts it must issue shareholders a special, taxable dividend of its undistributed earnings and profits. Weyerhaeuser estimates its 2010 profit at nearly $6 billion.

In afternoon trading, Weyerhaeuser shares were trading in themed-$44 range, up 4.5% on the day after hitting a 52-week high of $46.80 in morning trading. Its previous 52-week high was achieved on Dec. 3 when shares hit $44.02.