England 13/1/2013 – Investors who are keen to diversify their investments are increasingly turning to REIT providers to do so
Until relatively recently the meaning of the acronym, REIT was not widely understood, in the USA yes, in the UK no. REIT stands for Real Estate Investment Trust. In the UK, investment in real estate is normally called property investment, but this American term has found its way into the psyche of UK investors, since 2007 when REITs became available here.
This is a good thing because REITs represent a very good property investment opportunity. They give ordinary people an easy way to invest in property. The buying process is dealt with by the REIT team, so there is no searching for properties or dealing with solicitors and sellers. Investors are effectively shareholders.
REITs have to distribute 90% of their profits after tax to shareholders in the form of a dividend making it a very lucrative investment vehicle. In addition, in the UK, a REIT does not have to pay corporation tax. Not having to pay this bill leaves more money in the pot to be distributed to investors. Their corporation tax free status effectively removes a layer of taxation.
The majority of the profit made comes from rental income. Given that rents are still rising in the UK, people are attracted to this kind of investment vehicle because they feel that income from property rents will continue to grow. Whether this will actually be the case remains to be seen, but there is no reason why a diverse portfolio spread across industrial, retail, commercial and residential properties should not continue to enjoy rising rental income for some time yet.
An example of a REIT
McKay Securities PLC is a UK based property investment company that has REIT status. Their portfolio of properties is all in the South East and London. The company know that these areas of the UK always perform well over the long-term. Something many investors also have confidence in. Many people feel more comfortable investing with them rather than with companies whose portfolios are spread across too big a range of properties in too many areas. Investors find it more difficult to check the quality of a sprawling portfolio like that.
Contact:
McKay Securities PLC
20 Greyfriars Road
Reading, Berkshire
Zip: RG1 1NL
Tel: +44 (0)118 950 2333
Email: info@mckaysecurities.plc.uk
Website: http://www.mckaysecurities.plc.uk/
