BECOMING A UK-REIT 06
“company or group of companies” A UK-REIT can be a single company UK-REIT or a group UK-REIT 1 . A group for these purposes comprises the parent company (the ‘principal’ company) and its 75% subsidiaries, and their 75% subsidiaries and so on, provided that the parent company has an effective 51% beneficial interest in the lower tier subsidiaries. “predominantly property rental business” A property rental business is defined as ‘a business that generates income from land by means of exploiting an estate, interest or right in or over land as a source of rents or other receipts’. Income derived from a property rental business includes PIDs received from an investment in another UK-REIT. Certain types of income are not recognised as being derived from a property rental business, including income derived from the operation of a caravan site, income derived from temporary letting of surplus space or from premises that are treated for accounting purposes as owner occupied. Rental income in respect of electric-line wayleaves, gas or oil pipelines, mobile phone masts or wind turbines is similarly not treated as property rental income for these purposes. A UK-REIT is distinguished from other UK property investment companies only by its tax status.
PRINCIPAL CONCEPTS “admitted to trading”
Historically, a UK-REIT needed to be admitted to trading on a recognised
exchange for at least part of the first day on which it entered the regime. Thereafter, shares in UK‑REITs would need to either be listed on a recognised stock exchange throughout each accounting period or traded in each accounting period. New entrants to the UK‑REIT regime have a more relaxed regime in their first three accounting periods. An effect of this grace period is that a new UK-REIT admitted to trading on AIM has a period of up to three years to meet the share trading requirement which may otherwise be outside its control. The company could, in principle, choose to migrate to a full listing, or a dual listing on another recognised stock exchange such as The International Stock Exchange ‘TISE’, in order to retain UK‑REIT status. From April 2022, where one or more 'institutional investors' hold at least 70% of the ordinary share capital, the REIT will not be required to be admitted to trading.
1 In this guide we refer to UK-REIT groups. However, the analysis is generally equally applicable to a single UK-REIT company
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