Investor notification

Transcription

1 Investor notification 24 March 2016 Notice of change relating to: Henderson UK Property OEIC (an investment company with variable capital incorporated in England and Wales, authorised and regulated by the Financial Conduct Authority as a Non-UCITS Retail Scheme) This document is important and requires your attention. Some investors will need to take action on the basis of the information in this document. If you are in any doubt about the contents of this document you should consult a person authorised under the Financial Services and Markets Act 2000 to advise on investments of the type referred to in this document such as your stockbroker, tax adviser, accountant or other financial adviser.

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3 Glossary ACD Body Corporate Company Conversion Effective Date FCA Feeder Fund ISA Manager OEIC PAIF Property Investment Business Tax Regulations Henderson Investment Funds Limited, in its capacity as the authorised corporate director of the Company; a body corporate incorporated in any jurisdiction (including within the UK) or any entity treated as a body corporate for tax purposes in any jurisdiction with which the UK has any form of double tax treaty or other agreement to relieve double tax which has effect under the UK s tax legislation by Order in Council or under such a double tax treaty or other agreement; Henderson UK Property OEIC; the Company s change to PAIF status, involving a change to its name, its investment objective and investment and borrowing powers and, for certain investors, an exchange of shares in the Company for units in the Feeder Fund; 27 May 2016 or such other date as agreed between the ACD and the depositary of the Company; the Financial Conduct Authority; the proposed feeder fund which will invest into the Company from the Effective Date which will be known as the Henderson UK Property PAIF Feeder Fund; an individual savings account (within the meaning of the Individual Savings Account Regulations 1998); Henderson Investments Funds Limited, in its capacity as the proposed manager of the Feeder Fund; an open-ended investment company; an OEIC that has elected to be a property authorised investment fund pursuant to the Tax Regulations and governed by COLL; property investment business as defined in the Tax Regulations; the Authorised Trusts (Tax) Regulations 2006 (SI 2006/964), as amended from time to time. 3

4 Expected key dates In this section capitalised terms have the meaning set out in the Glossary Despatch documentation to investors 24 March 2016 Last return date for Forms of Election (either personal or corporate) 13 May 2016 (only relevant for those investors who have received or otherwise elect to complete a Form of Election) End of the accounting period for the Henderson UK Property OEIC Valuation of shares in the Company Effective Date of the Conversion: (in order to facilitate the Conversion dealing in the Henderson UK Property OEIC will be suspended after 12 noon on 26 May Effective Date for: a) adoption of PAIF status; b) change to the name of the Company; c) changes to the investment objective and investment and borrowing powers of the Company to be effective; and d) certain investors to receive units in the Feeder Fund in exchange for shares in the Company. First dealing day for the Feeder Fund and first post- Conversion dealing day for the Company 26 May 2016 Close of Business 26 May May :00am 27 May May 2016 The Company will then be known as Henderson UK Property PAIF. First valuation point for external investor dealing 12:00 noon on 31 May 2016 Confirmation of number of units held in the Feeder Fund Within 2 weeks of 31 May

5 Part 1 Changes to the Henderson UK Property OEIC from 27 May 2016 In this section capitalised terms have the meaning set out in the Glossary 1. Conversion of the Henderson UK Property OEIC to a PAIF We are writing to notify you of planned changes to the Company (Henderson UK Property OEIC) which, subject to regulatory approval, will take place on 27 May 2016, which is also referred to as the Effective Date. These changes, described generically in this document using the term Conversion, will result in the Company adopting a special tax status as a property authorised investment fund (or PAIF). As a result of the change in status, the Company will be renamed to Henderson UK Property PAIF. In conjunction with these changes, we propose to launch the Feeder Fund which is intended for those investors who cannot, or no longer wish to, invest directly in the Company following the Conversion. This circular sets out the main features of the Company and the proposed Feeder Fund and the benefits of converting the Company to PAIF status. It also explains the technical procedure for the Conversion and any action you may need to take. 2. Background and reasons for the Conversion The Company s predecessor, the Henderson UK Property Unit Trust, converted into an OEIC in We explained to investors at that time that this was an important first step in preparation for the adoption of PAIF status. The ultimate Conversion, however, was delayed in order to take advantage of an opportunity to grow the fund through the merger of the Old Mutual Property Unit Trust into the Company. This was completed in January 2015 and we are now able to complete the necessary steps to adopt PAIF status. A summary of the key points are listed below. Further information can be found in section 3. PAIFs are a type of tax-efficient property fund which benefit UK tax-exempt investors, including charities and pension funds (including self-invested pension funds) and those investing through an ISA. PAIFs are generally exempt from UK tax on income derived from property holdings and other investments with the result that tax-exempt investors in a PAIF benefit by the fund not being taxed (currently at 20%) on rental income. Existing tax-paying investors will generally not be affected by the change. We believe the Conversion is in the overall long-term best interests of all investors. The tax benefits of the Company as a PAIF should bring both direct benefit (to tax exempt investors) and additionally will help to bring new investors into the Company leading to increased economies of scale. 5

6 3. Changes to the Company 3.1. General In order to effect the change of status of the Company, it is necessary to make certain changes to the wording of the investment objective of the Company and to the applicable investment and borrowing powers. These changes are explained further below. However, the Conversion will not result in a material change to the manner in which the Company is managed. For instance: the investment objective of the Company will be amended to include required PAIF wording, but the overall objective of maximising a return combining capital and income will remain. This is further explained below; the investment policy of the Company is not changing and therefore the risk profile of your investment will be the same; the investment and borrowing powers of the Company will be amended to include reference to the particular powers and restrictions which apply to PAIFs. This will have no impact on the current portfolio of the Company or on the way the Company is currently managed; the value of your holding will remain materially unchanged; there is no change to the dealing process and the current means of communication will remain applicable for buying and selling shares in the Company or units in the Feeder Fund; the service providers will be the same Change of investment objective and investment and borrowing powers Following the Conversion, the overall aim of the Company will be the same; to achieve a high income together with some growth of both income and capital. However, as part of the change of status to a PAIF, the stated investment objective will be amended to make it explicit that the fund undertakes Property Investment Business (as defined in the Tax Regulations). All PAIFs must do this. Essentially this is a statement that the Company operates a property rental business, which generates income from land and buildings and/or carries on a business consisting of owning shares in UK real estate investment trusts (REITs) and/or their foreign equivalents. Accordingly, the investment objective of the Company on Conversion will make specific reference to this, but, apart from the insertion of the necessary regulatory wording, will continue unchanged. Similarly, the investment and borrowing powers will be amended to ensure the Company undertakes Property Investment Business. Other than these necessary amendments, the investment and borrowing powers will not be changing Change of name In recognition of the change of status of the Company, we will amend the Company s name to Henderson UK Property PAIF on the Effective Date. 6

7 4. Your ongoing investment and action you may need to take Following the Conversion, you will be able to get exposure to the Company s underlying assets in two different ways: either by investment directly in the Company or through investment in the Feeder Fund. However, it may be the case that only one of these options is possible or preferable in your particular circumstances. Therefore, in the following paragraphs we explain: the purpose of the Feeder Fund; the dynamic between the Company and the Feeder Fund; which of the structures we propose to place certain types of investor in by default; and what action (if any) you should take. Whatever your immediate choice may be, following the Conversion it will be possible for you to exchange shares in the Company for units in the Feeder Fund and vice versa. We propose to facilitate all such exchanges to minimise the impact of dealing spread and to ensure qualification for capital gains tax rollover relief. On receipt of a completed exchange form, we will facilitate exchanges between the Company and the Feeder Fund every three months, immediately after an accounting date of the Company/Feeder Fund. Any requests received not completed on an exchange form will not be accepted. Details of how you will be able to exchange your investment between the Company and the Feeder Fund will be available from us following the Conversion and will also be set out in the respective Prospectuses of the Company and the Feeder Fund The Feeder Fund Following the Conversion, it may be advantageous, or you may only be able, to invest in the Feeder Fund. A feeder fund is a fund that invests solely into another fund (a master fund); in this case, once authorised by the FCA, it will be an authorised unit trust investing in the Company. The Feeder Fund will not itself qualify as a PAIF. It is intended for those investors who would not qualify to invest directly in a PAIF as a result of the rules governing PAIFs, who do not wish to invest directly in a PAIF, or who are currently unable to access the Company for other reasons, such as administrative and operational issues. The Feeder Fund s sole investment will be shares in the Company. To the extent that the Feeder Fund is not fully invested in the Company, it will hold its remaining assets in cash for liquidity purposes. It is anticipated that there should be a close (but not exact) correlation between the investment returns from units in the Feeder Fund and those of the corresponding shares in the Company. The tax treatment for investors in the Feeder Fund will be the same as for investors in the Company prior to the Conversion to PAIF status. A list of the available classes of units in the Feeder Fund and the equivalent Shares in the Company are set out in Part 2B Your investment once the Company becomes a PAIF As suggested above, not all types of investor are eligible to invest in a PAIF and some investors may benefit from investment in one or the other of the Feeder Fund or Company. Where a particular investor should invest will depend on their particular circumstances. The following paragraphs explain the considerations for particular groups of investors and any 7

8 default positions we might apply at Conversion. However, nothing contained in the following section should be treated as financial or tax advice. If you are unsure of the most appropriate course of action for you, you should contact your financial and/or tax adviser. You will need to take action only if you do not want the default position to apply to you. All investors who are to receive units in the Feeder Fund on Conversion will receive units of an equivalent class to their shares in the Company. A list of the available classes in the two funds is set out in Part 2B Individual investors directly invested in the Company via Henderson or Henderson s ISA Individual (non-corporate) investors are eligible to invest in the PAIF and therefore may choose to invest in the Company or the Feeder Fund at Conversion. The decision on which fund will be most advantageous will depend on each investor s personal circumstances including their income tax bracket and their use of relevant tax allowances. We have summarised how different circumstances may affect individuals in Part 3. We plan to move all investors who are directly invested in the Company via Henderson (non ISA investors) to the Feeder Fund unless we are instructed to the contrary. This is because an investor s tax position in the Feeder Fund will be equivalent to the position in the Company prior to the Conversion. Some investors could miss out on significant tax benefits if they do not elect to remain in the Company and we have summarised the potential outcomes for individual investors in Part 3B. If you are unsure about your personal tax position you should take specific tax advice before choosing between the Company or the Feeder Fund. Individual investors will receive a Personal Form of Election with this document and should complete and return it in the enclosed reply-paid envelope if they wish to remain in the Company. Investors who hold shares in the Company through Henderson s ISA will remain in the Company post its Conversion to PAIF status. The tax exempt status of your ISA investment means you are able to benefit from the increased tax efficiency of the Company post its Conversion to PAIF status Corporate investors Companies and other Body Corporate investors may invest in the Company or the Feeder Fund at Conversion. If you are a Body Corporate investor, and wish to remain in the Company following Conversion, you must complete the enclosed Corporate Form of Election (which includes the corporate undertakings and declarations required by HMRC) and return it to us in the enclosed reply-paid envelope. Unless we receive this, we will have to move your investment into the Feeder Fund. However, not all Bodies Corporate will have the tax and accounting resources to deal with investment into the PAIF and may find investment into the Feeder Fund more manageable. There are rules around investments by Body Corporate investors into PAIFs. A maximum holding limit of under 10% of a PAIF applies (except in the case of nominee companies holding units for non-body Corporate investors or corporate investors holding less than 10%). In practice, however, in attempting to avoid breaches of this provision, we will monitor holdings approaching 8% and will impose our own maximum holding limit of 9% of the value of the Company. We will require investments in excess of these limits to be made in the Feeder Fund instead. 8

9 5. Costs of the Conversion Henderson will meet all costs in relation to the Conversion and the establishment of the Feeder Fund. The Company s normal running costs and transaction costs will continue to be borne by the Company. 6. UK tax implications The following is a summary of our understanding of the current UK legislation and HM Revenue & Customs practice relevant to UK resident investors regarding the Conversion. It may be subject to change. The tax consequences of the Conversion may vary depending on the law and regulations of your country of residence, citizenship or domicile. If you are in any doubt about your tax position, you should consult a tax adviser. The adoption of PAIF status by the Company will not in itself have any UK tax consequences for investors in it at the time. PAIF status does, however, affect the UK taxation of the Company s income and its income distributions (and accumulations) and this is explained in greater detail in Part 3A. Consequently the adoption of PAIF status will affect different investors in different ways and investors must therefore consider where they would prefer to make their investment. With the exception of Henderson ISA investors, any investors in the Company that wish to remain invested in it must complete a Personal/Corporate Form of Election (as relevant) and send it to Henderson, to be received by 10:00am on 13 May 2016, using the enclosed replypaid envelope. If you are not eligible, not able, or do not wish to remain invested in the Company, then your shareholding will be exchanged for units in the Feeder Fund of an equivalent class and value as part of the Conversion. Our default options for UK investors should leave you in a beneficial or tax-neutral position relative to your tax position prior to Conversion. Based on our understanding of the relevant tax legislation, if UK taxpaying investors in the Company should exchange all or part of their shareholding for a unitholding in the Feeder Fund, the units in the Feeder Fund will have the same acquisition cost and acquisition date for the purposes of UK tax on capital gains as their existing shareholdings. 7. Dealing in shares in the Company Any dealing request received before 12:00 noon on 26 May 2016 will be dealt with in the usual way. Requests received after that time will be dealt with following the Conversion and so will be carried over until the next valuation point of the Company, which is expected to be 12:00 noon on 31 May This is the first day post-conversion when dealing in the Company and Feeder Fund will be possible. Dealings in shares in the Company are expected to recommence on 31 May In the event that your shares in the Company are exchanged for units in the Feeder Fund on Conversion, you will receive confirmation of the number of units in the Feeder Fund issued to you within two weeks of 31 May If you invest in the Company monthly, by direct debit, your collection date will be unaffected by the Conversion. If, as part of the Conversion, your investment moves to the Feeder Fund, collections made after 1 June 2016 will be used to purchase units in the Feeder Fund. 9

10 Part 2A Comparison of the features of the Company and the Feeder Fund In this section capitalised terms have the meaning set out in the Glossary The following section gives more detail as to the changes to the Company as part of the Conversion and a comparison with the Feeder Fund. Your current investment The Company as it is now The Company from the Effective Date The Feeder Fund (pre-conversion to a PAIF) (upon Conversion to a PAIF) Fund type A standalone non-ucits Retail Scheme (NURS) A standalone non-ucits Retail Scheme and a PAIF (NURS) A standalone non-ucits Retail Scheme (NURS) Legal structure OEIC OEIC Unit trust Investment objective The objective of the Company is to achieve a high income together with some growth of both income and capital. It is intended that the Company be a PAIF at all times and so its investment objective is to carry on Property Investment Business and to manage cash raised from investors for investment in the Property Investment Business as further described below. HM Revenue & Customs has confirmed to the ACD that the Company meets the requirements to qualify as a PAIF under regulation 69O of the Tax Regulations. The objective of the Fund is to achieve a high income together with some growth of both income and capital by investing solely in the Company. The objective of the Company is to achieve a high income together with some growth of both income and capital. 10

11 Investment policy The Company aims to invest primarily in commercial property and property related securities. It may also invest in residential property and in non propertyrelated securities, units/shares in collective investment schemes, money market instruments, deposits, derivatives and forward foreign exchange contracts. The Company aims to invest primarily in commercial property and property related securities. It may also invest in residential property and, subject to the Tax Regulations, in non property-related securities, units/shares in collective investment schemes, money market instruments, deposits, derivatives and forward foreign exchange contracts. The Fund will invest solely in the Company. Currently the Fund invests in Class F Gross Accumulation Shares. Investments in these assets may include exchange traded funds, real estate investment trusts, unregulated collective investment schemes (which may include unauthorised property unit trusts and limited partnerships). Investments in these assets may include exchange traded funds, real estate investment trusts, unregulated collective investment schemes (which may include unauthorised property unit trusts and limited partnerships). Whilst the Company aims to invest primarily in the UK, it may also invest overseas. Whilst the Company aims to invest primarily in the UK, it may also invest overseas. Derivative instruments and forward foreign exchange contracts may be used for the purposes of efficient portfolio management and currency hedging. As the market in property derivatives develops, derivatives may be used outside of efficient portfolio management to meet the Company's investment objective. Derivative instruments and forward foreign exchange contracts may be used for the purposes of efficient portfolio management and currency hedging. As the market in property derivatives develops, derivatives may be used outside of efficient portfolio management to meet the Company's investment objective. If the Manager decides to use derivatives for purposes outside of efficient portfolio management, the ACD will give notice to Shareholders in the next Short Report. If the Manager decides to use derivatives for purposes outside of efficient portfolio management, the ACD will give notice to Shareholders in the next Short Report. As a result of the Company's investment policy it may mean at times that it is not appropriate to be fully invested but instead to hold cash or near cash. This will only occur when it is necessary to enable redemption of units, efficient management in accordance with the As a result of the Company's investment policy it may mean at times that it is not appropriate to be fully invested but instead to hold cash or near cash. This will only occur when it is necessary to enable redemption of units, efficient management in accordance with the 11

12 Permitted investors Retail investors investment objective of the Company or for a purpose ancillary to the investment objective of the Company. A detailed description of the types of assets the Company may invest in and the limitations on the extent to which the Company may invest is set out in Section 6 (Investment Powers and Limits) of this Prospectus. Professional/institutional investors investment objective of the Company or for a purpose ancillary to the investment objective of the Company. A detailed description of the types of assets the Company may invest in and the limitations on the extent to which the Company may invest is set out in Section 6 (Investment Powers and Limits) of this Prospectus. Retail Investors Professional/institutional investors which may be Bodies Corporate holding 9% or less of the value of the Company (investments in excess of 9% must be made into the Feeder Fund). The ACD will monitor all holdings approaching 8% of the value of the Company. Body Corporate investors not eligible to invest in the Company must invest through the Feeder Fund. Retail investors Professional/institutional investors which may be Body Corporate investors Pricing Dual pricing Dual pricing Dual pricing Frequency of dealing for subscriptions and redemptions Daily Daily Daily Valuation Point 12 noon 12 noon 12 noon Annual accounting date 31 May 31 May 31 May Interim accounting dates 31 August, 30 November and last day of February 31 August, 30 November and last day of February 31 August, 30 November and last day of February 12

13 Part 2B Comparison of the share classes available in the Company with the units available in the Feeder Fund In this section capitalised terms have the meaning set out in the Glossary The following section sets out the classes of share available in the Company and the equivalent units in the Feeder Fund. The Company Shares available to investors in the Company The Feeder Fund Equivalent class of units in the Feeder Fund Minimum initial investment Minimum holding investment Minimum subsequent investment Minimum redemption Regular savings plan Initial charge Annual management charge General Admin Charge (GAC) Class A Income & Accumulation (Net) Class I Income & Accumulation (Net & Gross) Class A (Net) Income & Accumulation Class I (Net) Income & Accumulation 1,000 1, Yes 5% 1.50% Company: 0.14% Feeder Fund: 0.12% 3,000,000 3,000,000 10,000 10,000 No 0% 0.75% Company: Feeder Fund: 0.055% Class G Income & Accumulation (Net & Gross) Class G (Net) Income & Accumulation 20,000,000 20,000,000 2,000,000 2,000,000 No 0% 0.675% Company: 0.045% Feeder Fund: 0.025% Class U2 Income & Accumulation (Net) Class Z Income & Accumulation (Net) Class U2 (Net) Income & Accumulation There are no Class Z units in the Feeder Fund 250,000,000 1,000,000 1,000, ,000 No 0% 0.60% Company: 0.045% Feeder Fund: 0.025% 10,000,000 10,000,000 1,000,000 1,000,000 No 0% 0.00% Company: 0.023% Feeder Fund: N/A 13

14 Part 3A Further information on Property Authorised Investment Funds and taxation In this section capitalised terms have the meaning set out in the Glossary Property Authorised Investment Funds (PAIFs) The characteristics of a PAIF are, in summary: it must be established as an OEIC; it must carry on Property Investment Business (that is, a continuing business consisting of a property rental business and/or investment in UK-REITs and/or equivalent foreign entities); at least 60% of its assets must form part of its Property Investment Business, and at least 60% of its income must come from the Property Investment Business; a Body Corporate (excluding nominees) cannot hold 10% or more of a PAIF s shares; it must have genuine diversity of ownership that is, the shares are available and marketed to a range of investors (not merely particular specific persons); and its income must be streamed for UK tax purposes into property income, interest and dividends. The major benefit of complying with these rules and obtaining PAIF status is that the Company should no longer be subject to corporation tax. This tax, currently suffered by the Company, is not recoverable by non-tax paying investors. In addition, rental and interest income paid by a PAIF will carry a tax credit reclaimable by many non-tax payers (and it can be paid gross to certain eligible investors, including ISA and pension fund investors). As not all of the income potentially paid by a PAIF carries this reclaimable tax credit and to ensure that tax paying investors pay approximately the same level of tax as if they had invested directly in the underlying assets, a PAIF must report the income that it pays in three streams for UK tax purposes (see below), although investors still receive one payment. Additionally, as a result of adopting PAIF status, UK tax-exempt investors such as ISA investors, occupational pension schemes and charities can receive gross property income distributions and gross PAIF distributions (interest). UK companies and UK authorised investment funds can also receive gross distributions. Some investors who would benefit from receiving PAIF distributions gross may not initially be able to do so because, for instance, their holdings are held on a fund platform, which does not yet have the functionality to hold PAIF shares, so they will have to invest in the Feeder Fund instead at the time of the Conversion. The introduction of the dividend tax allowance for UK individual investors in April 2016 affects the relative advantages for individuals of investing directly in the Company or through the Feeder Fund. We cover the implications of this more recent change in more detail in Part 3B. The ACD intends to facilitate exchanges of units in the Feeder Fund for shares in the Company every three months, immediately after an accounting date for the Company/Feeder Fund. This will enable investors constrained in this way (or who otherwise wish to do so) to exchange their holdings without suffering any capital gains or stamp taxes. Such exchanges will take place at the discretion of the ACD following receipt of a completed exchange form. 14

15 Streamed income Typically, a property fund like the Company will derive its income from various sources, including rental income and interest. All the income is distributed to investors periodically as one aggregated payment (treated before the Conversion as a dividend distribution). This contrasts with the position for a PAIF. Although a PAIF makes one aggregated income payment each distribution period, it is required to divide its income into up to three separate streams for UK tax purposes (and this breakdown will be shown on each tax voucher): a property income stream, which mainly comprises rental profit, known as property income distributions; a small interest income stream, which consists of any interest earned on property securities, such as property bonds, or on cash deposits, known as PAIF distributions (interest); and an additional income stream which will include dividend income received by the Company, known as PAIF distributions (dividends). The identification of the various streams of income allows each of them to be treated differently for tax purposes. Property income distributions and PAIF distributions (interest) will generally be paid net of basic rate tax (currently 20%). The tax on both of these income streams will be reclaimable by many non-tax payers (and can be paid gross to certain eligible investors). Any other income, i.e. PAIF distributions (dividend) will be treated as dividends for UK tax purposes. Income tax consequences of investing in the Feeder Fund The Feeder Fund will be liable to corporation tax on its net taxable income. Investors in the Feeder Fund will receive dividend distributions. From April 2016, UK individual investors will benefit from an annual dividend tax allowance of 5,000 (replacing dividend tax credits), but any individual who has taxable dividend income exceeding this allowance, including their dividend distributions, whether distributed or accumulated, will be liable to tax at 7.5% in the case of basic rate tax payers, 32.5% for higher rate tax payers and 38.1% for additional rate tax payers. UK corporation tax payers receiving dividend distributions (whether distributed or accumulated) are liable to corporation tax on the proportion of them that represents the Feeder Fund s taxable income and benefit from a deemed basic rate tax credit on this portion. Tax-exempt investors, such as ISA and pension fund investors, including SIPPs, are not liable to tax on the income but cannot reclaim the corporation tax paid by the Feeder Fund. Income tax consequences of investing in the Company The Company should not be liable to corporation tax on any of its income. Investors in the Company will receive income streamed in to up to three streams for UK tax purposes, as described above. Investors are taxed on the income regardless whether it is distributed or accumulated. UK individual investors will generally receive property income distributions (PIDs) and PAIF distributions (interest) net of basic rate income tax at 20%. Basic rate tax payers will have no further tax to pay on this income but higher rate tax payers will be liable to 40% tax on the gross amount, giving an effective rate of 25% on their net receipt, and additional rate tax payers will be liable to 45% tax on the gross amount, giving an effective tax rate of 31.25% on their net receipt. Basic and higher rate tax payers have an annual personal savings allowance of 1,000 and 500 respectively which they may use to exempt their PAIF distributions (interest) from tax. Individual 15

16 investors may also benefit from the new 0% starting rate for savings income (introduced in April 2015) in respect of their PAIF distributions (interest). UK resident individuals receiving PAIF distributions (dividend) are liable to tax, to the extent that their dividend income (including this income) exceeds their dividend tax allowance, as described under the heading Income tax consequences of investing in the Feeder Fund. UK corporation tax payers will generally be paid property income distributions (PIDs) and PAIF distributions (interest) without the deduction of tax at source. The PIDs are taxable in their hands as the profits of a property business and the PAIF distributions (interest) as yearly interest. PAIF distributions (dividend) are treated in the say way as dividends from a company, and so are generally exempt from corporation tax. Tax-exempt UK investors, such as ISA and pension fund investors, including SIPPs, may be paid the property income distributions (PIDs) and PAIF distributions (interest) without tax being deducted at source if they complete the appropriate declaration but otherwise they may reclaim the tax withheld from HM Revenue & Customs. 16

17 Part 3B Important tax considerations for investors in the Company or the Feeder Fund after the Effective Date In this section capitalised terms have the meaning set out in the Glossary This table indicates, for different categories of investors, whether investment in the Company or the Feeder is expected to be more tax efficient. It is a basic summary of the general position and is not tax advice. Investor category Investment in the Company is expected to be more tax efficient Investment in the Feeder Fund is expected to be more tax efficient Individual UK investors benefit from an annual 5,000 dividend tax allowance from April This may make your choice of investing directly into the Company or through the Feeder Fund more complicated. Whether an investor will be better off from a tax perspective investing through the Company or the Feeder Fund will depend on that investor s circumstances. Investors who are in any doubt about their personal tax position should take specific tax advice about their individual circumstances before choosing between the Company or the Feeder Fund. This summary is based on our current understanding of United Kingdom law and HM revenue & Customs practice expected to be in force at the time of Conversion, which may be subject to change. UK individuals Basic rate income tax payer Higher rate income tax payer Additional rate income tax payer Dividend allowance available to cover income * No dividend allowance available Dividend allowance available to cover all income No dividend allowance available Dividend allowance available to cover all income No dividend allowance available UK tax-exempt investors (including ISAs, registered pension schemes, charities) * If investing in the A share class. If investing through other share classes no difference in tax outcome is expected UK corporate tax payers No tax difference 17

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