Rugby to convert first start-up REIT

The AIM-listed company, run by David Tye and Andrew Wilson, have set up Rugby Estates Investment Trust, which they plan to convert to a REIT ‘within 12 months’ of floating on the main market of the London Stock Exchange. The company hopes to raise £47.4m from a placing of shares and will only be able to convert to a REIT once ‘a substantial proportion’ of the proceeds of the placing have been invested.

Rugby Estates Investment Trust will be externally managed by Rugby Asset Management and will aim to buy property companies carrying latent tax liabilities, which, once it has obtained REIT status, can be extinguished under the REIT rules.

These property companies, Rugby Estates Investment Trust said, ‘are expected to be controlled by individuals, families or family trusts; have assembled a mixed portfolio of properties over a number of years; have a portfolio value between £5m and £100m; have been conservatively managed, thus with potential to release latent value through more proactive management; and own properties of individual lot sizes below £10m’.

‘Rugby Estates Investment Trust has been created to enable investors to benefit from the opportunity which has been created through the introduction of the UK's REIT regime,’ said chairman Philip Kendall, a former partner of PricewaterhouseCoopers and board member of Samuel Montagu. ‘The company will undertake a strategy to establish a diverse income and growth-focused property portfolio which will offer both our investors and those vendors that we acquire assets from with a significant tax advantage over other non-REIT purchasers.’