Over the last several years, private letter rulings by theInternal Revenue Service have allowed the use of REITs to ownelectric and gas distribution systems, thereby increasing interestin their role in infrastructure investments, Weller says."Increased access to private capital through public-privatepartnerships would be a welcome complement to traditionalinfrastructure financing using tax-exempt bonds, and advantages ofusing a REIT structure over the traditionally-used fund model maybe the right incentive to generate interest."

The report which Weller prepared, "REITs and InfrastructureProjects: The Next Investment Frontier?" spells out the rationalefor using REITs in this context. "The challenges faced by theUnited States in maintaining and updating its currentinfrastructure have been well documented," Weller writes, notingthat a 2009 report by the American Society of Civil Engineers putsthe price tag for bringing infrastructure up to par would be $2.2trillion over the next five years.

Although the American Recovery and Reinvestment Act of '09provided some stimulus money for US infrastructure projects, andthe Obama administration has made a commitment to fund high speedrail and other select infrastructure categories, "public fundssimply will not be sufficient to meet all of the United States'ongoing infrastructure maintenance and new construction needs,"according to the report. "Additional sources of capital will benecessary to fill the gap."

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.