The Standard Life Property Income trust is to be converted into a real estate investment trust (Reit), in a move the board said would bring ‘significant advantages’ to shareholders.
After reviewing the ‘tax efficiency’ of its current structure, the trust’s board decided it was in the best interests of the ‘vast majority’ of shareholders to convert. Subject to shareholder approval, this will be completed by year-end.
The rules covering conversion to Reits were relaxed in 2012, meaning trusts no longer have to pay a 2% entry charge. They are also exempt from UK corporation tax on rental profits and capital gains, so can often offer improved returns to shareholders.
The board also aims to grow the £200 million trust, which is currently trading at a 16.4% premium to net asset value.
‘While the financial size of the company has increased significantly over the year, it remains below the level that some investors find attractive,’ chairman Paul Orchard-Lisle noted in the trust’s final results, announced last week.
The trust has returned 41.1% in share price terms over one year versus the MSCI ACWI/Real Estate index’s 23.35% gain.