Unlocking the Opportunities of the UK Real Estate Investment Trust

Abstract of Dissertation Presented to

________________________________________

in Partial Fulfilment of the

Requirements for the Degree _________________________

UNLOCKING THE OPPORTUNITIES OF THE

REAL ESTATE INVESTMENT TRUST IN UNITED KINGDOM

By

___________________

August 2006

This aims to present the opportunities in real estate investment trust funds in the United Kingdom

This proceeds by tracing the roots of REITs and presenting a background of the industry . REITs in other international and developed economies are included in the discussion as well . Shown also are the responses of various organizations to

the establishment of such trusts in the UK

Data was gathered through online resources of various books , journals and discussions . Main reference material however is the Discussion released by HM Treasury and Inland Revenue .Table of Contents

TOC \o "1-3 " \h \z \u HYPERLINK \l "_Toc5 " Table of Contents PAGEREF _Toc5 \h 2

HYPERLINK \l "_Toc6 " Executive Summary PAGEREF _Toc6 \h 3

HYPERLINK \l "_Toc7 " Background PAGEREF _Toc7 \h 4 HYPERLINK \l "_Toc8 " What is a Real Estate Investment Trust or REIT ? PAGEREF _Toc8 \h 4

HYPERLINK \l "_Toc9 " Types of REITs PAGEREF _Toc9 \h 5

HYPERLINK \l "_Toc0 " Equity REIT PAGEREF _Toc0 \h 5

HYPERLINK \l "_Toc1 " Mortgage REIT PAGEREF _Toc1 \h 5

HYPERLINK \l "_Toc2 " Hybrid REIT PAGEREF _Toc2 \h 5

HYPERLINK \l "_Toc3 " History of REITs PAGEREF _Toc3 \h 6

HYPERLINK \l "_Toc4 " REIT : Australia PAGEREF _Toc4 \h 7

HYPERLINK \l "_Toc5 " REIT : Asia PAGEREF _Toc5 \h 9 HYPERLINK \l "_Toc6 " REIT : United Kingdom PAGEREF _Toc6 \h 12

HYPERLINK \l "_Toc7 " Rationale PAGEREF _Toc7 \h 16 HYPERLINK \l "_Toc8 " Key Structures and Features PAGEREF _Toc8 \h 17

HYPERLINK \l "_Toc9 " Legal Structure PAGEREF _Toc9 \h 17

HYPERLINK \l "_Toc0 " Investment Activities PAGEREF _Toc0 \h 17

HYPERLINK \l "_Toc1 " Ownership Structure PAGEREF _Toc1 \h 19

HYPERLINK \l "_Toc2 " Tax Treatment for a UK-REIT PAGEREF _Toc2 \h 20

HYPERLINK \l "_Toc3 " Tax Treatment at Company (Vehicle ) Level PAGEREF _Toc3 \h 20

HYPERLINK \l "_Toc4 " Tax Treatment at Investor Level PAGEREF _Toc4 \h 21

HYPERLINK \l "_Toc5 " Responses to the Discussion PAGEREF _Toc5 \h 22

HYPERLINK \l "_Toc6 " Royal Institution of Chartered Surveyors (RICS ) PAGEREF _Toc6 \h 22

HYPERLINK \l "_Toc7 " Deloitte PAGEREF _Toc7 \h 25 HYPERLINK \l "_Toc8 " London Stock Exchange PAGEREF _Toc8 \h 25

HYPERLINK \l "_Toc9 " Key Performance Measures PAGEREF _Toc9 \h 29

HYPERLINK \l "_Toc0 " Qualifications PAGEREF _Toc0 \h 30

HYPERLINK \l "_Toc1 " Points for consideration PAGEREF _Toc1 \h 31

HYPERLINK \l "_Toc2 " Next Steps PAGEREF _Toc2 \h 31

HYPERLINK \l "_Toc3 " Conclusion PAGEREF _Toc3 \h 32

Executive Summary

After decades since its conception and establishment , Real Estate Investment Trusts , or REITs , are finally introduced to the United Kingdom through a legislation passed by the Government along with its Budget . This reform was prompted after a consultative study done on the country 's housing sector

Currently , the United States and Australia have the most established systems and processes regarding REITs . Asian markets as well are starting to show their potentials in the industry . Japan 's REITs...