Real Estate Investment Trust (REIT) in the United Kingdom
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The United Kingdom (UK) also has real estate investment trusts, starting January 1, 2007. This is set out in Part 4 of the Finance Act 2006 (as updated by the Finance Act 2007).
New companies can get approved from the start and older companies can convert to UK-REIT status. They must notify HM Revenue & Customs (HMRC) before the beginning of the accounting period, but do not have to change their corporate structure. In fact, UK-REITs have to be corporations. The most basic requirement is that the company is in the property rental business. They are allowed to also conduct other businesses, which however are taxable.
They also must distribute at least 90% of exempted rental income to shareholders to avoid owing income taxes. These are known as Property Income Distributions (PID). In the UK these are taxable at the full marginal tax rate. A REIT may also pay normal dividends, at a schedule of its own choosing, within 12 months of the end of each accounting period.
UK-REITs must be solely resident in the UK for tax purposes. They cannot be an open ended investment company. They must be listed on a recognized stock exchange, including the Main Market of the London Stock Exchange, but not AIM.
Also, every REIT in the UK is required to make certain that its rental income is at least 125% of the amount of interest paid on debt. Companies changing to this business structure must pay a one-time tax to the government of 2% of their gross assets. And investments in property must constitute more than 75% of a company's assets.
They must have at least three separate buildings, commercial or residential, and their market value cannot exceed 40% of the total.
Their tax exempt profits must be at least 75% of their total profits.
When they develop property, it must be for investment purposes. They must hold it at least three years after completion of the development.
Groups of companies can make up a Group UK-REIT, including some with noncorporate structures. This can be a principle company along with all subsidiaries it owns 75% or more of. (Except not open ended investment companies and insurance companies.)
The European Public Real Estate Association -- trade association promoting the publicly listed real estate industry in Europe.
UK REITs Include:
- British Land -- with a strong portfolio of Out of Town retail and London office properties.
- Capital Shopping Centres Group PLC -- largest owner and operator of prime regional shopping malls in the United Kingdom, and a split off demerger company from old REIT Liberty International.
- Hammerson plc -- develops, owns and operates prime regional shopping malls, out of town retail parks and office buildings in both the United Kingdom and France.
- Land Securities Group -- large owners of commercial real estate property including retail properties in the United Kingdom
- Segro -- large owners of offices, warehouses and industrial estate property in Spain, Italy, Germany, Belgium, Poland, Czech Republic, The Netherlands, Hungary and France
- Hansteen Holdings -- many industrial properties in the UK, Germany, France, Belgium and The Netherlands.
- Great Portland Estates -- owns many buildings in Central London.
- Primary Health Properties -- owns primary healthcare facilities throughout most of the United Kingdom.
- Workspace Group -- office and industrial space in London for small and medium sized businesses.
- Big Yellow -- top self-storage brand name in the UK.
- Shaftesbury plc -- invests only in the fashionable areas of the West End of London.
- Warner Estate Holdings -- operates six real estate funds with various types of commercial properties.
- Pineapple corporation -- this is technically a UK-REIT since it's based in the UK for tax purposes and has UK-REIT status. However, it's listed on the Luxembourg Stock Exchange and does not have its own website. Plus, the website of the Luxembourgh Stock Exchange has no information it. There's no information available on it.
- Derwent London -- owns many London commercial buildings, with great emphasis on style and architecture.
- Mucklow (A & J) Group plc -- diverse commercial property portfolio mainly in The Midlands of the UK.
- Town Centre Securities plc -- a large variety of commercial properties, including car parks.
- London & Stamford -- owns a variety of commercial real estate in the UK.
- Highcroft Investments -- small, owns commercial properties in South East England.
- McKay Securities -- owns a variety of commercial real estate in central London and South East England.
- Glenstone Property Group -- currently listed on the Channel Islands Stock Exchange.
- Metric Property Investments -- retail properties in the UK.
- NewRiver Retail -- shopping centers, especially for food stores, in the UK.
- Local Shopping REIT -- owns over 655 local retail properties throughout the United Kingdom.
Therefore, Real Estate Investment Trusts in the United Kingdom are a great way to profit from economic activity in the United Kingdom.
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