Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Anonymous,MyNameIsUrl,6Tricia,staffordian, for Donating to support the site

REITs limited to UK Property?

Alaric
Lemon Half
Posts: 5045
Joined: November 5th, 2016, 9:05 am
Has thanked: 14 times
Been thanked: 1075 times

REITs limited to UK Property?

#441988

Postby Alaric » September 13th, 2021, 8:49 pm

Are REITs more or less limited to UK Property?

A reason for asking is that there's a prospectus of a share offer in Aberdeen Standard European Logistics Income plc. This is an Investment Trust, but given the nature of its investments being warehouses etc., could it have alternatively have been a REIT? Its income is from rentals. Very little or none of the investments are currently in the UK.

tjh290633
Lemon Half
Posts: 6385
Joined: November 4th, 2016, 11:20 am
Has thanked: 650 times
Been thanked: 2655 times

Re: REITs limited to UK Property?

#442001

Postby tjh290633 » September 13th, 2021, 9:31 pm

Alaric wrote:Are REITs more or less limited to UK Property?

If you look at https://www.segro.com/property-search/e ... n#/mapview you will see that that REIT has properties all over Europe.

TJH

Gerry557
Lemon Slice
Posts: 346
Joined: September 2nd, 2019, 10:23 am
Has thanked: 32 times
Been thanked: 102 times

Re: REITs limited to UK Property?

#442052

Postby Gerry557 » September 14th, 2021, 9:11 am

Schroder European Real Estate Investment Trust PLC (SERE)

The investment objective of the Company is to provide Shareholders with a regular and attractive level of income return together with the potential for long term income and capital growth through investing in commercial real estate in Continental Europe.

murraypaul
Lemon Slice
Posts: 477
Joined: April 9th, 2021, 5:54 pm
Has thanked: 79 times
Been thanked: 170 times

Re: REITs limited to UK Property?

#442069

Postby murraypaul » September 14th, 2021, 10:19 am

tjh290633 wrote:
Alaric wrote:Are REITs more or less limited to UK Property?

If you look at https://www.segro.com/property-search/e ... n#/mapview you will see that that REIT has properties all over Europe.


However, I believe that REIT tax-exempt status only applies to their UK properties, and they are only required to pay 90%+ of profits as dividends on their UK properties?
It is though they were a UK REIT + an overseas non-REIT, combined in one company.
If not held in a tax-exempt wrapper, you have to track PID (May) and non-PID (September) dividends separately and pay tax on the non-PID dividends.

https://www.segro.com/investors/shareho ... sc_lang=en
Real Estate Investment Trusts – Tax Consequences for Shareholders
SEGRO plc (then called Slough Estates plc) converted to Real Estate Investment Trust (REIT) status with effect from 1 January 2007, and expects dividends payable out of profits earned in 2007 and thereafter to comprise both REIT Property Income Distributions (PIDs) derived from its tax-exempt, UK property rental business and ordinary, non-PID dividends derived from profits earned by its UK, non-REIT taxable business, as well as the Group’s overseas operations.

Dividends may be solely PIDs, solely ordinary dividends or a mixture of the two. However, one of the requirements of the UK REIT regime is that at least 90 per cent of the income profits of the tax-exempt, UK property rental business (as calculated in accordance with the UK REIT legislation) arising in each accounting period are distributed. The precise elements of each dividend payable will be announced in advance, and will be clearly stated on the dividend vouchers or dividend confirmation (as appropriate) themselves.

Ordinary, non-PID dividends will be treated in exactly the same way by shareholders as ordinary dividends paid before the company became a REIT. From 6 April 2016 the notional 10 per cent tax credit has been abolished and replaced with a tax free dividend allowance, which will apply to the ordinary, non-PID dividends received by UK resident shareholders who are subject to UK income tax. This allowance does not apply to the PID element of dividends.

tjh290633
Lemon Half
Posts: 6385
Joined: November 4th, 2016, 11:20 am
Has thanked: 650 times
Been thanked: 2655 times

Re: REITs limited to UK Property?

#442080

Postby tjh290633 » September 14th, 2021, 10:47 am

murraypaul wrote:However, I believe that REIT tax-exempt status only applies to their UK properties, and they are only required to pay 90%+ of profits as dividends on their UK properties?
It is though they were a UK REIT + an overseas non-REIT, combined in one company.
If not held in a tax-exempt wrapper, you have to track PID (May) and non-PID (September) dividends separately and pay tax on the non-PID dividends.

https://www.segro.com/investors/shareho ... sc_lang=en

Thanks for that clarification.

TJH

Alaric
Lemon Half
Posts: 5045
Joined: November 5th, 2016, 9:05 am
Has thanked: 14 times
Been thanked: 1075 times

Re: REITs limited to UK Property?

#442084

Postby Alaric » September 14th, 2021, 10:57 am

murraypaul wrote:However, I believe that REIT tax-exempt status only applies to their UK properties, and they are only required to pay 90%+ of profits as dividends on their UK properties?


Presumably this influenced Aberdeen Standard's decision to structure their European logistics fund as an IT rather than a REIT. It may not make so much difference to a UK tax payer, since whilst PIDs aren't taxed the same way as dividends, some ITs distribute as interest anyway under what's called a "streaming" regime. If it's interest it's taxed at the same rate as PIDs apart from being within the £ 1000 allowance.

mc2fool
Lemon Quarter
Posts: 3225
Joined: November 4th, 2016, 11:24 am
Has thanked: 6 times
Been thanked: 1111 times

Re: REITs limited to UK Property?

#442133

Postby mc2fool » September 14th, 2021, 12:42 pm

Gerry557 wrote:Schroder European Real Estate Investment Trust PLC (SERE)

The investment objective of the Company is to provide Shareholders with a regular and attractive level of income return together with the potential for long term income and capital growth through investing in commercial real estate in Continental Europe.

Is that a REIT? I don't see any evidence it is; there's no mention of REIT status in their annual report and no mention of PID/non-PID in their dividend declarations, and if, as it seems, REIT status only applies to UK properties, of which SERE seems to have none, then there wouldn't be any point in their getting REIT status.

Gerry557
Lemon Slice
Posts: 346
Joined: September 2nd, 2019, 10:23 am
Has thanked: 32 times
Been thanked: 102 times

Re: REITs limited to UK Property?

#442397

Postby Gerry557 » September 15th, 2021, 8:46 am

mc2fool wrote:
Gerry557 wrote:Schroder European Real Estate Investment Trust PLC (SERE)

The investment objective of the Company is to provide Shareholders with a regular and attractive level of income return together with the potential for long term income and capital growth through investing in commercial real estate in Continental Europe.

Is that a REIT? I don't see any evidence it is; there's no mention of REIT status in their annual report and no mention of PID/non-PID in their dividend declarations, and if, as it seems, REIT status only applies to UK properties, of which SERE seems to have none, then there wouldn't be any point in their getting REIT status.


To be honest it was based on the name "Schroder European REIT" I didn't read all the literature as I wasn't planning to invest. I thought that if the company was UK based it could invest in any area but again this is an assumption and maybe the tax regulations would be the starting point to clarify if this is in fact possible.

richfool
Lemon Quarter
Posts: 3151
Joined: November 19th, 2016, 2:02 pm
Has thanked: 777 times
Been thanked: 827 times

Re: REITs limited to UK Property?

#450350

Postby richfool » October 15th, 2021, 1:30 pm

This AIC article "Property Potential" by Ian Cowie, looks at UK Commercial Property and also European Commercial Property, so I thought I would post it on this thread:

https://theaic.turtl.co/story/compass-o ... 1/page/4/1


Return to “REITs & Property Companies”

Who is online

Users browsing this forum: No registered users and 1 guest