LONDON-Hammerson will be the first UK quoted property company to convert to REIT status next year. Company officials say they plan to adopt a REIT structure January of next year if the draft bill is enacted in its current form.

The FTSE 100 said it would pay the one-off entry charge of about $83 million, or 2% of its eligible UK property assets. A statement by chairman John Nelson to the Annual General Meeting said: “As many of you will know, the UK government has introduced into this year’s Finance Bill proposals for real estate investment trusts. The board of Hammerson has decided that, if the bill is enacted substantially in its current form, the company will elect for REIT status to take effect at the beginning of 2007.”

Industrial property specialist Brixton and shopping center specialist Liberty International PLC have also indicated they are likely to adopt a REIT for their business but have not yet said when. A briefing note by JPMorgan said they expect Slough Estates, British Land and Land Securities to follow suit. What makes Hammerson different, though, is that the company has already adopted a REIT structure for its French property development business.

In the finance bill presented on March 22, the government said companies that adopt REIT status in the UK will be required to pay out at least 90% of their tax-exempt income as dividends to shareholders. The proposed legislation now before Parliament allows companies to spread the entry charge over four years in installments of 0.5%, 0.53%, 0.56% and 0.6%. It also includes less restrictive requirements on gearing than originally suggested.

In Thursday’s statement, Hammerson said the first four months of 2006 have been marked by continued strong investment demand for property in its principal markets, with office letting markets in both London and Paris improving.

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