Clipstone to launch industrial REIT

Clipstone Logistics real estate investment trust hopes to raise up to £150 million by seeking admission to the London Stock Exchange and recognition by the UK Listing Authority.

A real estate investment trust (REIT) is a security that can be traded like a stock on an exchange but invests in real estate through either mortgages or properties.

Companies qualifying as REITs do not pay corporation tax on income profits and capital gains made by the property rental business, and distribution of income and capital gains to investors is treated as income from a property rental business. This means that tax treatment of REITs for investors is broadly similar to direct investment in real estate. However, capital gains from the REIT are taxed as income.

The company aims to qualify as a REIT from when it is admitted.

According to Clipstone's website, the prospective REIT will aim to generate income and capital returns for shareholders by investing in industrial property around the UK, concentrating on distribution warehouses and multi-let industrial properties. It aims to generate an income stream of £5 million a year or an annualised dividend yield of 4.5% in the year ending 30 June 2015 and 5.75% thereafter.

Toby Dean, managing director of Clipstone Land, says: "We believe that the distribution warehouse and multi-let industrial estate sectors can offer both attractive income and capital growth for investors.

"Right now there are a number of factors combining to drive the investment opportunity: the dynamic growth in online retailing in the UK, the economic recovery and the fact that supply has been constrained by a severe lack of development.

"We are launching the company to allow investors to get exposure to these asset classes through a highly-specialist property manager that has only invested in these specific sub-sectors."

The non-executive directors of the company are chairman Nick Lyons, Andrew Hynard and Phil Holland.