RSS FEED
BPF calls for REITs change in the Budget
Published: 2009-11-30 10:03:06
The British Property Federation (BPF) wants REITS (real estate investment trusts) to be allowed to count stock dividends towards their 90 per cent income requirements. The BPF is lobbying the Treasury to enable the change in the upcoming pre-Budget report.
Claiming this would not cost the Government any money, the BPF believes balance sheets would be stronger and more investors would be attracted to use these vehicles.
Peter Cosmetatos, the Federation's Director for Finance Policy, said the change "would allow REITS to manage their way through difficult times while maintaining shareholder value by giving shareholders the option of accepting cash or a stock dividend". REITS are not liable for corporation tax, but in return they are required to distribute 90 per cent of their property income to investors and currently this has to be in cash. The flexibility of offering stock in lieu of a cash dividend is seen as levelling the playing field between REITS and other listed companies.
According to John Richards, the BPF's vice-president: "Refinancing by the REITS over the last year has shown strong confidence in the sector and allowing them greater flexibility over how they manage their cash will benefit our economy as we begin to see improvements in occupier demand. This amendment would be a win-win move for the Government."
He also says that it is important for this support to be made available at the present time if regeneration projects around the country are to go ahead despite the recession. Without the necessary government support, there could be a more serious under-supply in new space and increased upward pressure on rents. Backing for the move already comes from the House of Lords Select Committee on Economic Affairs, which has described the current legal set up for REITS as "unduly cautious".