The right way/The REIT way.

The editorial comments on the government's role in improving the business climate in British Columbia and on the idea for turning the government's portfolio of office buildings into a real estate income trust. British Columbia's economy has finally turned the corner. A recent RBC Financial Group report predicts growth of 3.6% in both 2005 and 2006. To improve the business climate, the government reduced general corporate income and manufacturing and processing taxes, eliminated the capital tax on non-financial institutions, and lowered retail sales tax to 7%. It also increased the small-business income-tax threshold. The result: British Columbia's corporate tax rates are among the lowest in Canada. Liberal cabinet minister, Scott Brison, is floating the idea of turning the government's vast portfolio of office buildings into a real estate income trust and selling it to a market hungry for top-grade property investments. Of the 365 office buildings the federal government owns--worth more than 53 billion--perhaps 300 could be rolled in to a REIT. A REIT of government leases, ultimately backstopped by Canadian taxpayers, would be the income trust of many investors' dreams, not to mention the dreams of the investment bankers lucky enough to land the book.