Life Time Fitness Inc. (LTM), the operator of more than 110 fitness centers in North America, rose the most in more than four years after saying it was exploring converting its land holdings into a real-estate investment trust.
Converting to a REIT could provide “substantial benefits” and aid long-term growth plans, Chanhassen, Minnesota-based Life Time said today in a statement. The company also said it adopted a shareholder rights plan to prohibit anyone from owning more than 9.8 percent of its stock.
Life Time last month posted second-quarter profit that trailed analysts’ estimates and cut its sales forecast for the year as revenue at fitness centers open at least 13 months slid 0.6 percent. REITs generate at least three quarters of their income from rents or interest on mortgages financing real estate. They pay no corporate income tax in exchange for distributing at least 90 percent of taxable income to shareholders through dividends.
Life Time rose 11 percent to $46.32 at 9:36 a.m. in New York and earlier climbed as much as 15 percent for the biggest intraday gain since April 2010. The shares had slid 11 percent this year through Aug. 22, the most recent trading day.
Wells Fargo & Co. (WFC) and Guggenheim Securities are providing financial advice while Skadden, Arps, Slate, Meagher & Flom LLP and Faegre Baker Daniels LLP are serving as legal advisers.
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