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FEDERAL WAY, WA-Weyerhaeuser said Tuesday its board wants the company to convert to a real estate investment trust in order to take advantage of certain tax benefits. The timing of the conversion will depend upon the economic recovery and changes in tax policy but likely will occur sometime in 2010.

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.

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