Railroad REITs — What if?

With Buffett’s purchase of Burlington Northern, I have to toss out this idea: what if Burlington Northern took its extensive land holdings and spun them off into a REIT, where the railroad would pay the REIT a fee for renting the rails?

This could be a very tax-effective means of running the business(es). I would imagine that the operating company would pay a small dividend at best, while the REIT would pay a significant dividend.

Now, the fun question is which entity would be more valuable. I would guess that the REITs would be more valuable, given the scarcity of tracks. That said, logistics are probably worth more… the ability to use the track intelligently is worth more than the tracks, until things become more congested on the rails.