Sorin Dojan, Investment Week, 19 March 2025:
Internalising management for REITs removes the risk of further complicating cost reporting for investment trusts, but experts warn the advantages of an externally managed vehicle are also taken away.
Their caution came after Supermarket Income REIT (SUPR) put forward proposals to internalise its management function, subject to shareholder approval, while three days later, on 7 March, Urban Logistics REIT’s (SHED) board said it agreed to an internalisation proposal.
If implemented, the proposals would cut down on annual operating costs, with SUPR’s board arguing the management internalisation could deliver “significant cost savings of at least £4m per annum”.
As a result of switching to an internalised management, both SUPR and SHED will cease to be investment companies under Chapter 11 of the FCA Listing Rules, instead becoming trading companies (Chapter 6 of the FCA’s Listing Rules).
Richard Williams, senior analyst at QuotedData, said the decisions of the two trusts to internalise management were potentially influenced by the “negative impact of cost disclosure rules on the investment trust sector” of which externally-managed REITs belong to.
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