MedicX Fund Limited has announced that following a period of consultation, the directors have determined that it is in the best interests of shareholders as a whole to convert to a Real Estate Investment Trust (“REIT”). It is intended that an EGM will be held later this financial year, allowing shareholders the opportunity to vote on a resolution to become UK tax resident and convert into a REIT, with effect from 1 October 2017.
They say that, as the Fund matures and generates increasing amounts of taxable profit, conversion to REIT status will have the benefit of protecting shareholder returns by virtue of the fact that the regime would exempt the group from UK corporation tax on its profits (income and gains) from its qualifying UK property rental business, as well as widening the appeal of their shares to potential new investors.
As a REIT, MedicX Fund will continue to be able to make property investment decisions based on the property fundamentals rather than based on potential tax liabilities. In broad terms, the REIT regime seeks to achieve as far as possible the tax treatment that would apply if the shareholders held UK property directly.
To become tax resident in the UK, the company would move its central management and control from Guernsey to the UK. There will be consequential changes to the composition and membership of the Company’s board of directors. The appointment to the Board with effect from 1 April 2017 of Helen Mahy, who is UK resident, which was announced on 22 February, will facilitate this relocation.
MXF : MedicX plans to become a REIT