Harry Hyman, executive managing director of Primary Health Properties (PHP), which specialises in healthcare property, is confident shareholders will recognise the benefits of converting to the tax-beneficial status of Real Estate Investment Trust (REIT) at an EGM next month.

Harry Hyman, executive managing director of Primary Health Properties (PHP), which specialises in healthcare property, is confident shareholders will recognise the benefits of converting to the tax-beneficial status of Real Estate Investment Trust (REIT) at an Extraordinary General Meeting (EGM) next month.

‘This is good news for the company. There aren’t any real downsides to the move,’ says Hyman. The EGM will be held on 18 December and PHP is expected to change its status on 1 January 2007, the first available date under REIT legislation.

According to Hyman, PHP will be the first quoted company to write to shareholders with a detailed circular explaining the rationale, costs and benefits of going over to REIT. At the end of July the government passed the legislation, which has a precedent in the US, allowing property companies to make annual tax savings on income and eliminate capital gains tax paid on the disposal of assets.

The conversion will, says Hyman, incur a one-off charge of £4.5 million, based on the value of assets from year-end June 2006. The conversion charge will be paid off in four instalments. Savings around contingent liability tax are anticipated to be in the region of £21 million.

Hyman believes the move makes the company more attractive to investors through what he calls a ‘progressive dividends policy’. As for implications for the real estate industry as a whole, he suggests the extra liquidity created by REIT will lead to consolidation among companies. ‘We certainly have plans for growth,’ he says.