Start up costs of between 8% and 10% of assets would be incurred because of the launch of any new UK Real Estate Investment Trust. This would render new launches unfeasible according to the Association of Investment Trust Companies.

These costs would have to be borne by shareholders so the association believes newly launched Reits will compare unfavorably with offshore London-listed investment companies that serve the same purpose but with a lower regulatory burden.

The main problem is that UK Reits have been developed by the government to match property companies converting to the structure, rather than for investment firms to launch new vehicles.

Further costs would necessarily be incurred for professional services in carrying out the conversion. The AITC originally thought new companies would not have to meet the conversion charge.

By M. Sese
http://realestatepress.org