Glenstone gears up for REIT conversion with stock market listing
18 November 2008
The retail investor and developer has an existing portfolio of predominantly high street shops
Retail investor and developer Glenstone Property Plc has listed on the Channel Island Stock Exchange as a new public limited company in preparation for conversion to a REIT early next year.
The move towards a REIT has been driven by the group’s desire to take advantage of the present market to grow its business. Glenstone will be in an excellent position to capitalise on the currently fragile commercial property market with assets of circa £90 million, modest gearing of around 30% and the tax benefits that REIT status would bring.
Glenstone has an existing portfolio of predominantly high street retail shop investments throughout the UK, which it is looking to expand through the acquisition of privately owned property investment companies. Glenstone believes that REIT status, coupled with its successful investment business and considerable track record in property acquisition and management, will be attractive to property companies looking to disinvest at the present time.
As a REIT, any gains that are realised on the disposal of the group’s UK properties will be exempt from UK taxation. Glenstone will also benefit from the ongoing tax advantages of a REIT in respect of income and capital gains generated by its group. The group expects to meet the requirements of REIT status by its financial year end on 31 January 2009.
Duncan Kennedy, managing director of Glenstone Property Plc, says he is looking forward to the opportunities presented by the change in status of the business. “Since mid 2006, we have been closely monitoring the evolution of the property REIT and initially had some concerns about changing the status of our business from private to public,” he says. “However, the board has decided that, with our existing large shareholdership - of circa 80 investors - and with our management structure already run along the lines of a plc, the corporate changes required would be relatively straightforward.
“We are now convinced that the tax advantages of a REIT and subsequent buying opportunities to grow our business will be of substantial benefit to our shareholders in these increasingly challenging times, both in respect of enhanced dividends and asset value.”
Duncan adds that, while the stock market listing opens up their shares to a wider audience, it is strictly speaking an introduction rather than flotation as its principal aim is not to raise money but to meet the conditions of REIT conversion. Glenstone is the first potential REIT to be listed on the Channel Island Stock Exchange and is believed to be one of only three property companies to have listed in preparation for conversion to a REIT.
King Sturge provides valuation advice to Glenstone’s property portfolio; Jackson Criss and Jones Lang LaSalle advise on property acquisitions and KPMG is its tax adviser. KPMG Corporate Finance (Channel Islands) sponsored the listing.
