Today marks the first day of trading in shares in real estate investment trusts (Reits), as the UK property market goes through one of its biggest changes ever.
Nine existing property companies have converted to Reit status as of 1 January, with a further seven quoted companies intending to convert over the coming six months, reports industry association Reita.
Another 26 companies are unlikely at this stage to contemplate the corporate change required to become a Reit, the association adds.
However, Reit status is also being considered by companies not traditionally quoted in the property sector, but which base a significant amount of their business on the fact they also happen to be landlords.
These include Enterprise Inns, Aim-listed Terrence Hill Group and Mitchells and Butlers (formerly known as Bass). Being a landlord to publicans is a well-known route to steady cashflow, which makes the move to becoming a Reit attractive, as do the possible tax efficiencies involved.
According to an AME Capital report on the global Reit market, some 2000 funds available had a combined market capital of some £905bn as of the end of November last year.
Investors may be encouraged by its other figures suggesting annualised returns for 2006 were over 30% in all regions apart from Africa and the Middle East. Southern Europe returned over 60%, mainly because of rapid appreciation in Spanish vehicles, according to AME Capital.
|Converted 1 Jan|
|Great Portland Estates|
|Primary Health Properties|
|Derwent Valley (merger with LMS)|
|London Merchant Securities (merger with Derwent)|
|Mucklow (A & J) Group Plc|
|Warner Estate Holdings|
|Capital & Regional|
|Grainger Trust plc|
|London & Associated Properties|
|Marylebone Warwick Balfour Group Plc|
|Minerva Property Holdings|
|Quintain Estates and Development|
|St Modwen Properties|
|J Smart & Co (Contractors)|
|Stewart & Wight|
|Town Centre Securities|
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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