NovaStar, a troubled subprime mortgage lender that has drastically scaled back its business, said yesterday that it was giving up its status as a real estate investment trust, the New York Times reported. The company could not afford the USD157 million dividend it would have to pay to maintain the status.
The company said the move would leave it with a substantial tax bill for 2006. It added, however, that it expected to be able to delay paying that tax bill until it was able to offset the 2006 profit with the losses it expected to report for this year.