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Mill Group launches mainstream UK buy-to-let market REIT


Investors can now gain tax efficient exposure to the buy-to-let market without taking on the full cost of a property following the launch of the first mainstream UK residential Real Estate Investment Trust (REIT).

The company, which is managed by the property investment specialists Mill Group Residential, holds a portfolio of residential properties and as a REIT would pay no tax on its core rental income or capital gains.

Its IPO is the first to simultaneously target professional investors – via an institutional investor roadshow – and sophisticated online investors via the crowdfunding platform SyndicateRoom. Both are being offered the same class of shares. Mill Group intends to list the REIT on a UK stock exchange, after which the shares will be tradable.

The minimum investment for those buying equity in the Mill Residential REIT via SyndicateRoom is just GBP1,000. To qualify as a REIT, the company will distribute at least 90% of its profits from its rental business to its shareholders in the form of dividends. Dividends have tax advantages for investors who hold their REIT shares in an ISA or Self-invested Personal Pension (SIPP).

Though their history goes back to nineteenth century America, REITs first appeared in the UK in 2007 as a highly transparent, tax efficient investment for those seeking to gain a broad exposure to the property market without the cost and hassle of owning property directly.

Previous UK REITs have mainly focused on commercial property, but Mill Residential REIT is the first to invest exclusively in the mainstream residential sector. Its initial portfolio is almost fully let and generating income, and consists of properties located in the REIT’s initial target locations of London, Southern England and the Midlands and ranging in value from GBP180,000 to GBP430,000.

The REIT is launching with seed capital invested or committed from its managers of circa GBP2million and is making an initial GBP300,000 of equity available via SyndicateRoom. It will seek to grow by taking an opportunistic approach – acquiring companies with portfolios of good quality mainstream residential properties where REIT shares or REIT tax advantages can be used, individual rental properties to be developed, and build to hold developments.

David Toplas, chief executive of Mill Group Residential, says: “With house prices disappearing out of reach for would-be buyers in several parts of the country and mortgage rates expected to rise in 2015, rental demand – and landlords’ incomes – are going from strength to strength.

“Mill Residential REIT will add further value to its portfolio through development and refurbishment, and offer its shareholders a tax efficient, affordable and, when listed,  more liquid alternative to owning a self-managed, buy-to-let property.

“Mill Group Residential has always seen itself as an innovator in the property and finance space, and we view SyndicateRoom as a natural partner to help us raise funds from sophisticated crowdfunding investors in tandem with our IPO.”

Gonçalo de Vasconcelos, founder and CEO, SyndicateRoom, says: “Mill Group has been successfully investing in and developing the UK’s property market for more than 20 years, and its exceptional pedigree underpins the launch of this pioneering REIT.

“The Mill Residential REIT offers both large and small investors a more liquid way to hold a diverse range of buy-to-let properties in their portfolio, but at a fraction of the cost of owning a property outright.

“That this is the first time a traditional IPO has been combined with crowdfunding is both a testament to Mill Group’s progressive approach and a demonstration of just how sophisticated crowdfunding has become. SyndicateRoom has long established itself as the go-to option for sophisticated investors and companies alike; and we are delighted to be trailblazing by bringing this new class of property investment to market.”

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