Great Portland to pay EUR 43 mln to become REIT

UK-based Great Portland Estates (GPE) will pay EUR 43.2 mln to convert to one of the first real estate investment trusts (REIT) in the UK. GPE estimates that the switch would eliminate tax liabilities of almost EUR 193.4 mln. The group also announced on Wednesday that the valuation of its properties, as on December 31, 2006, was EUR 2.159 bn including the share of its joint venture assets, which amounts to an increase in value of about EUR 124 mln or 6.1%.

GPE's ceo Toby Courtauld said: 'As we enter the REIT regime, the group is in great shape. With take-up of office space running ahead of the long term average and rents growing across the Capital, we look forward to continuing this strong performance during 2007'.

As real estate investment trusts were introduced in the UK on January 1, 2007, nine existing property companies converted into REIT status, including Great Portland Estates. A further seven quoted property companies are to convert to a REIT, most of them in the first half of 2007.

However, REIT status is also being considered by companies not traditionally quoted in the property sector, such as Enterprise Inns, Aim-listed Terrence Hill Group and Mitchells and Butlersbut, which base a significant amount of their business on the fact they also happen to be landlords.

REITs campaign group Reita listed 26 property companies it deems unlikely to convert to the REIT regime, including Countrywide, Savills, Cardiff Property and Development Securities. The UK has become the 19th country to introduce REITs, which have seen long-term success in the US, Australia, Japan, Netherlands, Belgium and France.