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REITs (Real Estate Investment Trusts)

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REIT stands for Real Estate Investment Trust. They are collective investments which pool investors money. REITs were established to avoid double taxation on income from property assets within a corporation. Therefore what has happened recently is that the larger quoted property companies have converted into REITs to take advantage of the current tax regime. There are also other companies which have converted or will be converting shortly. Taxation arrangements differ in various countries but the principal is similar. In the UK, to qualify, a REIT must be a close-ended Investment Trust, UK resident and its shares publicly traded on a recognised Stock Exchange. It must also distribute 90% of its income by way of dividends.

There were nine UK listed property companies that converted to Real Estate Investment Trusts status on day one (January 1st 2007).

They were:

Land Securities
British Land
Hammerson Property
Primary Health Properties
Brixton Plc (taken over by Segro Plc)
Derwent Valley (Now Derwnet London Plc)
Great Portland Estates
Liberty International
Slough Estates (Now Segro Plc)


We believe there are a further six companies that may convert soon.

Companies that have indicated they will not be converting yet, if at all, are:

Development Securities
Helical Bar
St. Modwen
Minerva
Quintain Estates
Capital & Regional
Grainger Trust.

These are predominantly companies that make most of their profit from property trading rather than from rents.

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