Real Estate Investment Trusts (REITs)

Real Estate funds are typically broken down into three main categories:

  1. Property Funds - these are typically unregulated collective investment schemes used by professional investors, family offices, corporate entities and high net worth individuals seeking to acquire real estate through a fund structure;
  2. Property Authorised Investment Funds (PAIF) - these provide investors with an open-ended alternative to listed UK REITs and other fund vehicles. PAIFs are designed to offer competitive returns to investors from professionally managed real estate portfolios;
  3. Real Estate Investment Trusts (REITs) - these are far more popular due to the enhanced compliance and due diligence they undergo when being established, as well as the tax benefits they deliver post launch.

What is a REIT?

A REIT is ultimately a Collective Investment Scheme for property investment. Unlike many other property investments, REITs are traded on stock exchanges such as the AIM market in the UK, in the same way as any other share. REITs are therefore an attractive way for investors to invest in property.

As REITs are specialist property vehicles, 75% of profits must come from property rental and 75% of the company’s assets must be involved strictly in the property rental business. REITs must also distribute at least 90% of their tax-exempt income profits to investors, which makes them an attractive investment proposition.

In exchange for operating within these fairly strict rules, and to boost investment in UK real estate, REITs do not pay corporation or capital gains tax on their property investments.

How we can help you with your REIT structure:

As REITs pay out 90% of their income profits to investors, it can be challenging for them to build up enough capital to reinvest in new properties from their own profits, which is why they rely on selling shares to raise capital, or taking on debt.  

As real estate fund specialists, we are able to help you develop and structure your REIT in such a way that it is able to attract outside investors and manage its debt book and leverage. 

Who we work with for REIT structures:

  • Property Developers (Private or Public operators);
  • Entrepreneurs with a track record in property trading and development;
  • Charities seeking to buy real estate;
  • Educational establishments;
  • Retailers;
  • Shopping Centre owners;
  • Self Storage companies.

Why XCAP Global for your Real Estate Fund Management & REITs?

  • We develop solutions around your specific requirements;
  • We offer you the ability to market the REIT throughout Europe to expand your investor base;
  • We and our partners assist in the structuring, implementation, infrastructure and listing of the REIT on the AIM market;
  • We offer regulatory hosting solutions, allowing you to promote and market your fund throughout Europe.
  • We introduce you to our professional partners to assist you in developing compliant marketing materials and brochures to promote your REIT.

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