REITS
Interim Statement 2006 extracts
Extract from the Chairman's Statement
REITs
This is also the Company’s last report to shareholders before making the attractive change to REIT status. We are calling an EGM on 20 December at which we will put to shareholders the
changes to our Articles of Association necessary before we can elect into the new REIT regime from 1January 2007. The REIT regime advances UK quoted property companies, removing the
tax disadvantage versus other property market investors that has held back the sector and its valuation. I am confident British Land will be a leader of the new regime, offering an attractive and
secure but still lively investment, exploiting its size and expertise to benefit our customers and the continued modernisation of the UK’s built environment.
An important element of REITs is higher cash distributions for shareholders. Reflecting our continued growth in profits, we are pleased to announce today an 8% increase to the interim dividend
to 5.6 pence per share. Thereafter we will switch to payment of dividends quarterly – smoothing cash flows for shareholders that are more reflective of the long-term continuous rental inflows that
so distinguish our business.
Our first quarterly dividend will be paid in May in respect of the three month period to 31 December 2006 and will be 6.5 pence per share. Our first dividend in respect of REIT trading will be 8.25 pence for the quarter to 31 March 2007, paid in August.
In respect of our first fiscal year as a REIT, we expect the four quarterly dividends together to total no less than 33 pence, which would be 94% up on the dividend paid for our 2005/6 financial year.
British Land will continue to direct its strategy towards long-term growth in income and creating superior total returns. Dividends and their growth will be a more important component of return than before, but still only an element alongside capital appreciation.
Extract from the Chief Executive's Statement
REITs
We intend to make the REIT election with effect from 1January 2007, subject to EGM. An expected £315 million entry charge will be provided for in the quarter to 31 December 2006. Pro forma financial data is updated on our website, showing initial benefits of operating in a largely income and capital tax-free regime thereafter. The accompanying regulatory regime is light touch in concept. There will be kinks to iron out, but we expect to be able to compete successfully as a REIT – since tax and dividends
aside, nothing changes on day one. We intend to continue to execute our existing strategy, meeting customer needs and thereby creating shareholder value from actively managed, efficiently financed real estate.
We believe that the REITs regime, longer term, will reinforce the competitive position of quoted property companies like British Land. Fiscal efficiency, light touch regulation and attractive, asset-backed growth is a strong story for the long-term investor.
British Land offers focused real estate investment with a pre-eminent combination of performance, scale and accessibility – a recipe of even greater relevance as the audience for quoted property investment expands and deepens in the UK and internationally.
