A bill that bans corporations from spinning their real estate holdings off into real estate investment trusts on a tax-free basis was approved by Congress and signed into law at The White House on Friday. The legislation is part of Congress' annual bill to extend expiring tax provisions. There have been about 15 transactions of this kind over the past five years, including Darden Restaurants’ $747m spinoff of Four Corners Property Trust and Hilton Worldwide’s plan to spin its hotels off into a REIT.

The structure has faced substantial scrutiny. “Concerns about companies abusing the spinoff structure for tax avoidance purposes is certainly part of the reason [for this legislation],” said Wayne Strasbaugh, partner at Ballard Spahr. “The intent of the previous law was to allow a spin-off to occur tax-free only in certain, limited circumstances.”