A Real Estate Investment Trust (REIT) is a company that manages a portfolio of real estate to earn profits for shareholders.
After paying a conversion fee, a REIT escapes corporation tax. It must pay out 90% of its property income to shareholders.
It is an investment through buying shares in a listed property company that has elected for REIT status and operates in accordance with REIT regulations. The REIT regulations are intended to ensure the company is primarily engaged in property investment, rather than in development or other non-property related activities.
Most UK REITs focus on the UK, though a few have European investments. This sort of specialisation is a global characteristic of REITs, and reflects the diversity of legislation in some countries.
REITs can be very tax efficient, as the property company pays no corporation or capital gains on the profits made from property investment.
The major UK REITs are also many times larger than most property unit trusts, and are very transparent, as they are subject to continual market scrutiny. As REITs are all listed property companies, investments in them are generally very liquid.
Shares in listed property companies are significantly more volatile than direct property investments or unit trusts, and perform more like equities than property. However, in the long-term, their performance is more closely correlated with property than equities.
Recent performance has been much poorer than for direct property, and shares in REITs have also continued to trade at a discount to Net Asset Value, despite the removal of the tax inefficiencies that were a major explanation for the discount.
The tax issues include the fact that dividends from REITs are treated as income to the investor, and are taxed accordingly.
Distributions are subject to a withholding tax at basic rate income tax, except for certain classes of investors who can register to receive gross rather than net payments. These include charities, UK companies, and pension funds. REITs can also be held in ISAs and Child Trust Funds (CTFs), and the managers of these can receive gross distributions, making these highly tax efficient.
The following list records when individual UK REITs entered and exited the market or changed their names.
To get more information on individual REITs visit our REITs company information table.
1 January 2007 – Launch of UK REITs
Eight UK REITs are launched:
Great Portland Estates
Liberty International (now Capital Shopping Centres Group Ltd)
Primary Health Properties
Slough Estates (now SEGRO)
15 January 2007
Big Yellow converts to a REIT
1 April 2007
Shaftesbury plc converts to a REIT
Warner Estate Holdings converts to a REIT
2 April 2007
Slough Estates changes its name to SEGRO
11 May 2007
Local Shopping REIT launches as the first newly created REIT
1 July 2007
Derwent London converts to a REIT
Mucklow (A & J) Group plc converts to a REIT
1 October 2007
Town Centre Securities plc converts to a REIT
1 January 2008
Rugby Estates converts to REIT
1 April 2008
Highcroft Investments converts to a REIT
McKay Securities converts to a REIT
23 June 2008
Pineapple Corporation launches a REIT (on the Luxembourg stock exchange)
1 February 2009
Glenstone Property Group converts to a REIT (on the Channel Islands stock exchange)
25 August 2009
Brixton is taken over by SEGRO – and therefore ceases to exist as a REIT
6 October 2009
Hansteen converts to a REIT
24 March 2010
Metric Property Investments launches as REIT
7 May 2010
Liberty International is now called Capital Shopping Centres Group, following a demerger
15 June 2010
Rugby REIT is bought by IRET Securities Ltd and therefore ceases to exist as a REIT
1 October 2010
London & Stamford joins the main market as a UK REIT
22 November 2010
NewRiver Retail joins the main market as a UK REIT
03 August 2011
ApexHi Property Fund Ltd admitted to the Official List of the Channel Islands Stock Exchange
13 August 2012
Ground Rents Income Fund PLC admitted to the Official List of the Channel Islands Stock Exchange
25 January 2013
The merger of London & Stamford and Metric. The new company will now be known as LondonMetric Property
2 April 2013
Safestore Holdings PLC and Assura Properties PLC both confirm REIT status
A comparison of investor returns from a UK REIT and a UK taxable company - April 2013
A complete list of UK REITs with links to company information and performance data.
A summary from Deloitte including the required conditions for becoming a REIT and remaining within the regime.
Read the latest edition of the European Real Estate Association's authoritative annual review of the global REIT story.
Chart the performance of the FTSE EPRA/NAREIT REITs and non REITs indices.
See the change in the ratio of share prices and published net value of assets for UK REITS and Non-REITS indices.