London & Stamford Property Plc, co-owner of one of the U.K.’s largest shopping malls, may establish a residential real estate investment trust and increase its housing assets by about 75 percent.
Expanding the housing portfolio to more than 300 million pounds ($466 million) from 170 million pounds today “would provide a suitable platform for the creation of a residential REIT in which we would retain a significant stake,” the Guernsey-based company said in statement today.
London & Stamford aims to increase residential holdings in London areas such as Islington and Battersea, where it already owns properties, Finance Director Martin McGann said today in an interview. The company wants the U.K. Treasury to eliminate a tax on dividends paid from one REIT to another, which would make it more profitable to operate a new residential REIT.
The value of non-prime properties is “weakening” and that may continue, according to the statement. McGann said the company is interested in City of London real estate and prime retail property.
London & Stamford reported a first-half net loss of 5.3 million pounds, compared with a year-earlier profit of 16.3 million pounds, after administrative costs rose and the value of its real estate declined.
“While the values were flat, the income has increased quite materially, so that gives us more space for dividend growth,” said McGann.
The company is offering to sell a group of U.K. distribution properties, known as the Radial portfolio, for 300 million pounds, said McGann. The properties have a book value of 255 million pounds and another asset would be included, he said, without being more specific.
London & Stamford fell 3.8 pence, or 3.2 percent, to 114.9 pence in London, the biggest drop since Nov. 1. The shares have declined 12 percent in past six months, while the FTSE 350 Real Estate Investment Trust Index has lost 22 percent.