The government is to consider whether to allow the payment of stock dividends by REITs, a measure that would help alleviate the strain on balance sheets in the struggling listed property sector.

Yesterday, Workspace, the office and workplace developer, said it was to seek authority to offer shareholders dividends in shares as an alternative to cash as part of a package of measures to recapitalise, including a £87.2m rights issue and a renegotiation of banking facilities.

A decision to allow stock dividends would offer relief to property companies, which are trying to find ways to conserve cash and identify new equity because of falling asset values.

Financial Times