REITs limited to UK Property?

[Alaric]

Are REITs more or less limited to UK Property?

A reason for asking is that there's a prospectus of a share offer in Aberdeen Standard European Logistics Income plc. This is an Investment Trust, but given the nature of its investments being warehouses etc., could it have alternatively have been a REIT? Its income is from rentals. Very little or none of the investments are currently in the UK.

[tjh290633]

Are REITs more or less limited to UK Property?

If you look at https://www.segro.com/property-search/e ... n#/mapview you will see that that REIT has properties all over Europe.

TJH

[Gerry557]

Schroder European Real Estate Investment Trust PLC (SERE)

The investment objective of the Company is to provide Shareholders with a regular and attractive level of income return together with the potential for long term income and capital growth through investing in commercial real estate in Continental Europe.

[murraypaul]

Are REITs more or less limited to UK Property?

If you look at https://www.segro.com/property-search/e ... n#/mapview you will see that that REIT has properties all over Europe.

However, I believe that REIT tax-exempt status only applies to their UK properties, and they are only required to pay 90%+ of profits as dividends on their UK properties?
It is though they were a UK REIT + an overseas non-REIT, combined in one company.
If not held in a tax-exempt wrapper, you have to track PID (May) and non-PID (September) dividends separately and pay tax on the non-PID dividends.

https://www.segro.com/investors/shareho ... sc_lang=en

Real Estate Investment Trusts – Tax Consequences for Shareholders
SEGRO plc (then called Slough Estates plc) converted to Real Estate Investment Trust (REIT) status with effect from 1 January 2007, and expects dividends payable out of profits earned in 2007 and thereafter to comprise both REIT Property Income Distributions (PIDs) derived from its tax-exempt, UK property rental business and ordinary, non-PID dividends derived from profits earned by its UK, non-REIT taxable business, as well as the Group’s overseas operations.

Dividends may be solely PIDs, solely ordinary dividends or a mixture of the two. However, one of the requirements of the UK REIT regime is that at least 90 per cent of the income profits of the tax-exempt, UK property rental business (as calculated in accordance with the UK REIT legislation) arising in each accounting period are distributed. The precise elements of each dividend payable will be announced in advance, and will be clearly stated on the dividend vouchers or dividend confirmation (as appropriate) themselves.

Ordinary, non-PID dividends will be treated in exactly the same way by shareholders as ordinary dividends paid before the company became a REIT. From 6 April 2016 the notional 10 per cent tax credit has been abolished and replaced with a tax free dividend allowance, which will apply to the ordinary, non-PID dividends received by UK resident shareholders who are subject to UK income tax. This allowance does not apply to the PID element of dividends.

[tjh290633]

However, I believe that REIT tax-exempt status only applies to their UK properties, and they are only required to pay 90%+ of profits as dividends on their UK properties?
It is though they were a UK REIT + an overseas non-REIT, combined in one company.
If not held in a tax-exempt wrapper, you have to track PID (May) and non-PID (September) dividends separately and pay tax on the non-PID dividends.

https://www.segro.com/investors/shareho ... sc_lang=en

Thanks for that clarification.

TJH

[Alaric]

However, I believe that REIT tax-exempt status only applies to their UK properties, and they are only required to pay 90%+ of profits as dividends on their UK properties?

Presumably this influenced Aberdeen Standard's decision to structure their European logistics fund as an IT rather than a REIT. It may not make so much difference to a UK tax payer, since whilst PIDs aren't taxed the same way as dividends, some ITs distribute as interest anyway under what's called a "streaming" regime. If it's interest it's taxed at the same rate as PIDs apart from being within the £ 1000 allowance.

[mc2fool]

Schroder European Real Estate Investment Trust PLC (SERE)

The investment objective of the Company is to provide Shareholders with a regular and attractive level of income return together with the potential for long term income and capital growth through investing in commercial real estate in Continental Europe.

Is that a REIT? I don't see any evidence it is; there's no mention of REIT status in their annual report and no mention of PID/non-PID in their dividend declarations, and if, as it seems, REIT status only applies to UK properties, of which SERE seems to have none, then there wouldn't be any point in their getting REIT status.

[Gerry557]

Schroder European Real Estate Investment Trust PLC (SERE)

The investment objective of the Company is to provide Shareholders with a regular and attractive level of income return together with the potential for long term income and capital growth through investing in commercial real estate in Continental Europe.

Is that a REIT? I don't see any evidence it is; there's no mention of REIT status in their annual report and no mention of PID/non-PID in their dividend declarations, and if, as it seems, REIT status only applies to UK properties, of which SERE seems to have none, then there wouldn't be any point in their getting REIT status.

To be honest it was based on the name "Schroder European REIT" I didn't read all the literature as I wasn't planning to invest. I thought that if the company was UK based it could invest in any area but again this is an assumption and maybe the tax regulations would be the starting point to clarify if this is in fact possible.

[richfool]

This AIC article "Property Potential" by Ian Cowie, looks at UK Commercial Property and also European Commercial Property, so I thought I would post it on this thread:

https://theaic.turtl.co/story/compass-o ... 1/page/4/1