National infrastructure bank discussion from Felix Rohatyn and Rodney Slater in the FT

Unfortunately, the opinion piece is behind a paywall. For those of you who are subscribers, here is a link to whole piece. But I’ll quote the part that I think this is really intriguing:

Second, Congress can expand the definitions of Real Estate Investment Trusts (Reits) and Master Limited Partnerships to include investments in assets such as roads, water, ports, airports, transmission lines, waste water and bridges.

Reits are publicly traded corporate entities that invest in commercial real estate and pay a reduced or zero rate of tax on their earnings. In turn, Reits must distribute 90 per cent of their income to investors. Similarly, MLPs are publicly traded partnership vehicles that do not pay federal and state income taxes and return income to partners.

Applying the Reit/MLP model to infrastructure assets would attract investment from the deep US retail and institutional investor market, dramatically increasing funding support for new projects. Projects that were once unable to attract support could become financially viable, and more infrastructure projects could be supported.

Ok, now this is a really interesting idea that I hadn’t thought of. Since I don’t know much about Reits, I’d need to think more about this. I already have the opinion that way too much commercial property gets sweetheart deals at tax time, through TIFs and things like Prop 13, so I am not sure why, exactly, we need to have a tax incentive for infrastructure investment. I think there is *plenty* of existing demand for infrastructure bonds without sweetening the pot in this way. Maybe I’m wrong, though–I’m basing my comments on impressions rather than considered reflection on the data.

What are your thoughts? What have Reits done for commercial real estate that needs to happen for infrastructure?