The manager of Elite Commercial REIT has announced that Elite UK Commercial Holdings (ECHL), a wholly-owned subsidiary of the REIT, has successfully listed on The International Stock Exchange (TISE) with effect from August 26.
Elite Commercial REIT is the first Singapore-listed REIT whose wholly-owned subsidiary has a technical listing on TISE.
The REIT will continue to hold 100% of the shares in ECHL.
The admission of ECHL on TISE is a required step for ECHL and its subsidiaries to qualify as a UK REIT group in order to enjoy favourable tax treatment for its UK property rental business.
See also: 'Buy' 'pandemic-proof' Elite Commercial REIT for its unique UK position: analysts
Key benefits from the technical listing include an exemption from UK corporation tax, which currently stands at 19%. Pursuant to the Double Taxation Treaty between the UK and Singapore, any UK withholding tax applicable on UK property income distributed by ECHL to Elite Commercial REIT is expected to be limited to 15%.
In addition, any future latent capital gains tax and its corresponding provision of deferred tax liabilities on the REIT’s properties is expected to be eliminated.
The manager also highlights that the listing will result in a competitive advantage over non-UK REITs as tax on unrealised gains and its corresponding provision of deferred tax liabilities is expected to be eliminated on acquisitions.
Pro forma financials based on Elite Commercial REIT’s unaudited 1HFY2021 end June results and assuming that the listing was completed on Jan 1 indicate that the REIT’s distribution per unit increases 3% post-qualification as a UK REIT to 2.71 British pence, while net asset value increases by 3.2% to 64 British pence.
Units in Elite Commercial REIT closed at 67 British pence on August 26.
