Real Estate Investment Trusts - amendments
The measure
There were a number of clarifications and amendments announced:
- Real Estate Investment Trusts (REITs) will be allowed to raise funds through issuing convertible preference shares
- The legislation will be updated to apply the same definitions for the 'balance of business asset' test for single company and group REITs
- Clarification as to the application of the balance of business assets test, where funds awaiting reinvestment have arisen from the disposal of a property that has only been partly used in the property rental business
- Amendment of legislation with respect to the requirement for a company to be listed and non-close 'close' at the time it joins the REIT regime.
Who will be affected and when?
Existing and future REITs.
When?
Legislation will be introduced with effect from 22 April 2009.
These items had previously been identified as requiring amendment and today's announcement provides useful clarification.
Very little was announced in the Budget in relation to REITs. It was hoped the Government would help REITs weather the current economic climate by allowing deferment of payment of property income dividends; by allowing stock dividends to count towards property income dividend requirements; and by relaxing the interest cover ratio. In addition it was disappointing that improvements were not made to the REIT regime to facilitate residential REITs.
