REIT consultation into “institutional investor” status a step in the right direction, but still a long way to go says EY

20 March 2013

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Marion Cane, a director in EY's real estate team commented:

“The consultation on REITs as “institutional investors” is welcome and builds on the last two consultations into REITs.  If the proposal is adopted, we may begin to see existing REITs establishing joint ventures to share the risk of large development projects with partners who will take a stake in future rental and capital growth.

“REITs have demonstrated their ability to raise finance from a variety of sources since their introduction in 2007. A positive conclusion to this latest review should attract further investment into the UK real estate sector through REITs, which will be positive for the UK economy. This consultation is a step in the right direction, but it is not a forgone conclusion.  There is still a long way to go before it becomes a reality.”

"There are other extensions to the REIT regime that merit consultation.  We would like to see the Treasury consider further the changes necessary to encourage residential REITs and the development of the REIT model to allow for the creation of Mortgage REITs, encouraging increased diversification in the sources of finance available for commercial property."