Britain's Land Securities and Slough Estates have confirmed that they are to begin the process of converting to real estate investment trusts (REITs) on 1 January 2007. Under the REIT system, real estate companies will pay far less tax on condition that most of the profit is paid out to shareholders in the form of dividend.
Britain's Land Securities and Slough Estates have confirmed that they are to begin the process of converting to real estate investment trusts (REITs) on 1 January 2007. Under the REIT system, real estate companies will pay far less tax on condition that most of the profit is paid out to shareholders in the form of dividend.
London-based Land Securities is the leading property development company in the UK and the largest property company in Europe. In a statement Land Securities said its shareholders approved changes to the company's articles of association during an extraordinary general meeting held on Friday, December 15. The REIT conversion charge to be paid to the government will probably be in the order of £300 mln (EUR 447 mln), or 2% of the group's qualifying property assets. Land Securities has a turnover for the year to March 31 2005 of £1.86 bn.
'We are confident that our conversion to REIT status will bring benefits to shareholders in terms of the group's tax efficiency and are excited to be one of the first companies to take advantage of the new legislation. We look forward to the increased dynamism this change will bring to the sector,' Francis Salway, group Land Securities's ceo said.
Separately, Slough Estates has announced it is to become a REIT in the UK. It is also taking a second listing on Euronext to enable it to bring its activities in France under French equivalent, SIIC.
