Why wait for 2013? More and more, income trusts are deciding to convert into corporations in advance of the end of their tax-favoured status. And as the 2013 final deadline comes closer, the pace of conversion from income trust to corporate status is picking up.

In 2007, the year after the federal government announced the change in income trusts’ tax-exempt status, none converted into corporations, according to the Toronto Stock Exchange. In 2008, six income trusts changed their status. Last year, 23 trusts converted. In the first half of this year, 15 more trusts have converted, and another five made the change in July alone.

So, are investors running out of income trusts? Not at all. As Investment Executive reported in June, there were 248 in 2006 — and there were about 170 as of late May.

The significant result of the conversions thus far is that payouts are lower. Mind you, straight comparisons between income trust distributions and corporate dividends are difficult. Many trust distributions were a mixture of cash from earnings, return of capital, capital gains and other income.

Let’s examine what has changed in the distributions from former trusts that have had at least a full 12 months of life as a corporation. (See accompanying table.)

Of the 18 trusts that converted to corporations between Jan. 1, 2008, and July 31, 2009, only three are paying the same dividends as they did in their final year as income trusts.

These are Superior Plus Corp. (paying $1.62 a share annually), Crescent Point Energy Corp. ($2.76) and Premium Brands Holdings Corp. ($1.18). Only one former trust, Exchange Income Corp., is paying more — $1.56 now vs $1.15 in its final year as an income trust.

In addition, four income trusts that converted to corporations in that period have since disappeared from view.

Comparisons of price performance since the month each conversion occurred are mixed. On average, share prices of companies that converted from trust status in 2008 have dropped by 40%.

But there have been great variations. Bonterra Energy Corp.’s shares saw a gain of 81% since the firm became a corporation in November 2008. In the same period, the S&P/TSX composite index gained 26%. And Transforce Inc.’s shares saw a gain of 20% since May 2008, while the index dropped by 20% in the same period.

Of the 2009 group of income trusts that converted into corporations, the average price change as of their respective months of conversion is a rise of 29%. In comparison, the index averaged a gain of 17% in that time.

Again, in the 12 months or more since conversion, there have been some big gainers. Hartco Inc. has doubled in price vs a 26% rise by the index. Total Energy Services Inc.’s stock price has risen by 89% since its month of conversion, vs a 13% gain for the index. Exchange Income Corp.’s shares have risen by 30% vs a 9% rise in the index since its conversion.

The conversions to stocks from trust units have been on a one-to-one basis thus far — and with a minimum of complexity.

For example, on the morning of June 1, 2010, Precision Drilling Trust opened for business; by the end of the day, it had transformed into Precision Drilling Corp.

In the case of Precision and many other income trusts, it was a reversion to corporate status. In Precision’s case, it had become a trust in 2005. IE