REITs on the AIC site

[jonesa1]

Dear David (DavidM13), in this topic: https://www.lemonfool.co.uk/viewtopic.php?t=19695 you describe 2 types of REIT (Equity and Fund). Could you please expand on the differences? I can find articles with references to multiple types of REIT, but those articles are differentiating between REITs which own property and REITs which fund mortgages, or they differentiate between retail, residential, etc - from a US perspective.

My interest was raised when I noted that Money Observer have dropped Picton from their reference portfolios on the basis that Picton now has REIT status and is no longer recognised by AIC.

Thanks, Andrew

(with thanks to mc2fool for suggesting that you may be able to clarify this)

[DavidM13]

Good Morning,
The reason the AIC do not class Picton as part of their universe now is not the REIT status but the fact they are now classed as a commercial property company. We do have other REITs in our universe.

This https://www.picton.co.uk/media/2320/circular.pdf explains how they have changed from a Chapter 15 to Chapter 6 listing on the London Stock Exchange official list. Search for the word chapter in the document and you can learn about the differences. You can see the listing category of firms on the LSE page here https://www.londonstockexchange.com/exc ... XSSMM.html So you will see this says “Premium Equity Commercial Companies” whereas our members would say “Premium Equity Closed Ended Investment Funds” There are different reporting rules, e.g. Picton no longer requires to bring out a Key Investor Document (KID).

Separately, as regards the first question. Our data provider Morningstar works to determine if they class a REIT as a “Fund” or “Equity” REIT. They have a criteria with certain elements such as the below which helps them determine how it should be classified.

i) Does the security have a clearly defined investment policy
ii) Does it require a substantial number of personnel to run the undertaking
iii) Does it have an external manager
iv) Are the directors non-executive


A seemingly up-to-date list of REITs can be found here https://investmentproperty.co.uk/proper ... ors-guide/

[jonesa1]

David, thanks.