Definition of a REIT
Real Estate Investment Trusts (REITs) are property companies that allow people and organisations to invest in property and receive benefits as if they directly owned the properties themselves.
The effect is that taxation is moved from the corporate level to the investor level as investors are liable for tax as if they owned the property directly. Industrials REIT (previously Stenprop) became a UK REIT in May 2018.
REITs are exempt from UK tax on the income and gains of the property rental business. REITs are requried to distribute at least 90% of their tax exempt profits, although this does not apply to capital gains which can be retained.
Benefits of REITs
Investors can own property while having experienced teams buy and manage it.
With potentially high-yield returns and moderate capital appreciation, historically tested through a variety of market environments, REITs are important investments that offer eased access to the property market. With a low correlation to investments such as equities and bonds, they also offer beneficial diversification to a portfolio. They are a liquid asset, readily traded on stock exchanges, and offer simple, strong and transparent tax treatment and corporate governance.
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