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Xerox Corp already looks as much like an insurance company as it does an office equipment manufacturer, and according to the Wall Street Journal, the Stamford, Connecticut copier maker has reached agreement in principle for a further extension of its plunge into financial services by way of a 25% investment in property company VMS Realty Partners Inc. According to sources close to the talks, Xerox has agreed to pay $80m for the stake in the privately-held Chicago company, and will also lend it $120m in exchange for a new issue of subordinated debt. The six-year old company specialises in tax-shelter syndications on property investments, and has a $6,000m portfolio, but its operations are less attractive following the new tax regime that came into force on January 1, which limits the size of write-offs that investors can take. Companies like VMS therefore need to reorient their business towards revenue-generating rather than tax-efficient deals. The investment agreement with Xerox is expected to be wrapped up by the end of this week.

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