Sirius Real Estate to convert UK business to REIT

Sirius Real Estate to convert UK business to REIT

Sirius Real Estate plans to convert its UK business to a UK Real Estate Investment Trust (REIT) from next month.

The proposed REIT conversion follows the company’s UK acquisition of BizSpace in November 2021, said Sirius in a press release.

By entering the UK REIT regime, the company will no longer be subject to UK corporation tax on income or gains from its property rental business and will be required to pay 90% or more of its UK property rental business income to shareholders annually, as property income distributions (PIDS), which can be satisfied by both cash and SCRIP dividends.

”Certain classes of shareholder are eligible to receive gross PIDs however in general PIDs are paid to shareholders after the deduction of withholding tax at the basic rate of income tax (20%). Shareholders not resident in the UK may be entitled to claim a full or partial refund from HMRC where a treaty dividend rate applies,” the company said.

According to Sirius, REIT conversion is not expected to affect the company’s current dividend policy of paying out 65% of annual Funds From Operations (FFO) and in addition to PIDs, the company will continue to make distributions derived from its German operations (non-PIDs). Non-PIDs will be treated like “normal” dividends paid by non-REIT companies and will not be subject to UK withholding tax.

”At the Company’s next Annual General Meeting (AGM), scheduled for 29 July 2022, approval will be sought for the insertion of new clauses to its Articles of Incorporation (Articles) in line with UK REIT requirements. Further details on the changes to the Articles and the implications of the REIT conversion will be provided to shareholders ahead of the AGM,” the company added.

Andrew Coombs, Chief Executive of Sirius Real Estate, said: “The proposed conversion to a UK REIT is a natural progression following the company’s transformational acquisition of BizSpace in the UK last year, and provides greater comparability to other UK REITs in terms of our FFO and dividend yields for investment purposes.”