Data from IQ-EQ shows there are now 77 private REITs in the UK, just over two years after these vehicles were introduced
Private real estate investment trusts (private REITs) have surged in popularity since their 2022 introduction, data obtained by investor services group IQ-EQ shows.
Figures supplied by HMRC under the Freedom of Information Act show that 77 private REITs have filed their first tax return (as of 29 August). At the end of the 2023/24 tax year (5 April), HMRC had received tax returns for 67 private REITs, who were managing a collective £14.5 billion in assets.
| Number of private REITs that had entered the regime at tax year end (5 April)* | 2021-22 | 2022-23 | 2023-24 |
| 2 | 15 | 67 |
*Data provided by HMRC, counted as vehicles that have filed their first tax return
Joe Woodbury, Director, Funds at IQ-EQ, said: “While these figures are a good demonstration of the surging popularity of private REITs, we know that the true numbers are significantly higher, due to the delay between setting up a company and filing a first return.”
The UK’s REIT regime was first introduced in 2007 but was previously open only to companies listed on recognised stock exchanges. This listing requirement was removed on 1 April 2022, allowing for ‘private REITs’ in cases where institutional investors hold at least 70 per cent of the ordinary share capital.
The UK’s burgeoning private REIT sector adds to the 48 publicly traded REITs presently listed on the London Stock Exchange, with these vehicles holding approximately £43 billion in assets.
Mr. Woodbury comments: “Private REITs are an exciting prospect for private equity real estate (PERE) investors. UK managers are now able to offer domestic and international institutional investors a highly tax-efficient, well-understood structure that can help boost fundraising after a challenging period. I’m confident this sector will continue to grow in the coming months, as transaction levels pick up and interest rates ease.”
REITs are exempt from UK corporation tax on income profits and capital gains, meaning the tax impact on investors is similar to making direct property investments. As tax is levied at the shareholder level, tax-privileged institutional investors can claim exemptions on profits received from a UK REIT.
IQ-EQ, which has experience establishing and administering a range of real estate funds and vehicles, has this month released a series of reports analysing real estate markets across Asia, Continental Europe, the United Kingdom and the U.S.
