Property sector welcomes shares option for Reit dividends

The property industry welcomed moves to allow Britain's biggest commercial landlords to pay dividends in shares instead of cash.

Chancellor Alistair Darling proposed changes in the law so real estate investment trusts (Reits) such as British Land and Land Securities can conserve cash.

Reits currently have to pay shareholders 90% of profits from rental operations in cash —which has proved costly in the recession.

The Government said it intends to legislate "as soon as possible" an amendment to allow UK Reits to issue optional stock dividends as an alternative to cash.

Liz Peace, chief executive of the British Property Federation, said: "Allowing Reits greater flexibility over how they manage their cash will benefit our economy as we begin to see improvements in occupier demand."

Phil Nicklin, real estate tax partner at Deloitte, said: "Stock dividends have proved popular recently and will help Reits to conserve cash. This is important in an environment where new debt is difficult to come by."