REIT here, REIT now : should the UK consider the introduction of a REIT-style vehicle

Abstract

This thesis investigates a number of the issues currently pertaining to the introduction of a UK Real Estate Investment Trust (REIT) vehicle. It uses a combination of qualitative and quantitative studies to evaluate whether the UK government should investigate and pursue this form of property equity securitisation. The report is split into three parts. The first describes the history of the UK securitisation lobby and investigates the theory and characteristics of the US REIT vehicle. It describes similar vehicles used throughout North America, Europe, Asia and Australia with specific regard to their varying restrictions and regulations. The second section uses Modern Portfolio Theory to examine the benefits of a securitised property vehicle within a mixed asset portfolio. The exercise tests the theory that the UK Public Limited Company is at a disadvantage to the American REIT and the Australian Listed Property Trust. Finally, an American REIT and an American C-Corporation are compared in a valuation exercise to assess the magnitude of the US REIT's tax benefits. The final section draws from the previous analyses to present a qualitative discussion of the key arguments with regard to different participants in the UK property market. In conclusion, it considers the pros and cons of a UK REIT vehicle in light of current UK macro-economic issues.