Under the PAIF structure tax-exempt investors such as those invested through an ISA, pension fund or SIPP, as well as charities, are exempt from paying UK tax on property related income and interest payments.
BMO said this change will result in an uplift of 20% of the fund’s current yield for eligible individuals.
Investors who are not eligible will be able to invest via a feeder fund structured as a unit trust and will have the same underlying exposure to the directly held properties as the PAIF.
The fund was launched in 2010 and is ‘bricks and mortar’ based, investing directly in income producing UK commercial property. It is co-managed by Guy Glover and Julian Smith.
“We are committed to maximising total return and value for our investors,” said Glover. “We believe the fund’s conversion to a PAIF is in the long-term best interests of shareholders, many of whom will now be able to benefit from investing in a more tax-efficient way.”
“The UK commercial property market is continuing to deliver good performance, which we believe will increasingly reflect improving occupier demand and rental growth,” Glover continued. “Rental growth is already coming through strongly in London and we see this spreading to the regions. Income return is likely to become the more important element in total returns over the next five years.”
