UK REITs and stock dividends
The measure
The Government reconfirmed its intention to introduce a change to the REIT regime whereby REITs will be allowed to issue stock dividends in lieu of cash dividends in meeting the requirement for them to distribute 90% of profits from their property rental businesses each accounting period.
Who will be affected?
UK REITs
When?
The legislation will be introduced as soon as possible after the summer recess and will have effect for property income distributions made on or after the date the relevant Finance Bill receives Royal Assent.
Our view
This is a welcome change for REITs given their desire to retain cash within their businesses. This is particularly important in an environment where new debt is difficult and expensive to come by.
