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BPF finally wins stock dividends change for UK - Reits

Real estate investment trusts (Reits) will be allowed to count stock dividends towards their 90 per cent income distribution requirements, in a victory for the British Property Federation.

The Budget documents today said:

“The Government intends to legislate in a Finance Bill to be introduced as soon as possible in the next Parliament, to allow real estate investment trusts (REITs) to issue stock dividends in lieu of cash dividends in meeting the requirement to distribute 90% of the profits from the REIT's property rental business.”

The BPF had written to the Treasury calling for the amendment to be made in the upcoming Budget report, and today it has been confirmed that the changes will be legislated for when there is sufficient parliamentary time.

They are likely to appear in the next Financial Bill, not the current one.

The amendment will help real estate firms conserve cash during the recession and leave them better placed to expand over the coming year.

The changes had enjoyed cross-party support particularly over the fact that they would not cost anything to the Exchequer.

The BPF had previous said that allowing the amendments would help Reits conserve cash, strengthening their balance sheets and making it easier for them to invest in the current economic climate.

Liz Peace, chief executive of the BPF, said:

“Refinancing by the Reits has shown strong confidence in the sector and many are now assessing opportunities for new investment. Allowing Reits to have greater flexibility over how they manage their cash will benefit our economy as we begin to see improvements in occupier demand.”

For more information contact Andrew Teacher,Head of Media, on 0207802 0364 or email ateacher@bpf.org.uk