British Land removes billion pound tax bill

conversion into a REIT has boosted the company’s net assets
by £1.6bn after eliminating deferred tax.

‘The translation of property performance to shareholder value in turn is
substantially boosted without tax and via higher dividends,’ stated chief
executive Stephen Hester in his review of the company’s quarterly performance.

‘Breadth of investor interest in
REITs, the strengthened competitive
position of quoted REITs as the property vehicle of choice, both support the
prospect of sustained stock valuation gains relative to history.’

However, the company posted a profit on ordinary
activities before taxation of £381m for Q4 2006, compared with £617m a year
earlier, due to goodwill impairment and refinancing charges. The total cost of
converting to a REIT would be £338m, with a net upwards effect of £1.3bn on the

REITs are listed companies owning, managing and earning rental income from
commercial or residential property, which distributes most of its income profits
and in return should be exempt from corporation tax if the legislative
conditions are met.

Further reading:

Q&A: REIT here, right now

Tax dispute may derail Big Yellow’s REIT plans

The REIT choice

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