IFM22320 | Real Estate Investment Trust : Group conditions and rules: Financial Statements: property rental business and residual: treatment of entities that are not wholly owned

Subsidiary companies that are not wholly owned (CTA2010/S533(3))

Where the group’s interest in a subsidiary company is less than 100%, the financial statements exclude a proportion of the income, expenses and values represented by the beneficial interest in the company held by non-members of the group. For this purpose, the beneficial interest in the subsidiary is measured by reference to the beneficial entitlement to profits available for distribution to shareholders.

Joint venture companies

A group may be involved in a joint venture carried on via a company. If there is a Joint Venture Look-Through notice in place (see IFM30005), then the group (referred to as the venturing group) includes the income, assets etc of the joint venture company in the financial statements for the property rental business and residual in the same way as it does for the same items for companies that are members of the venturing group (CTA2010/S588).

Where no Joint Venture Look-through notice is in place the group’s share of the assets and income of the joint venture company are reflected on financial statement s532(2)(c) as residual interests – see IFM22330

Other entities in which the group has an interest

A group UK-REIT may have interests in a number of other entities, such as partnerships, unit trusts, joint ventures and companies that are not 75% owned. The activities of these entities are reflected in the financial statements for the property rental business and residual in one of two ways, depending on the nature of the vehicle and the level of influence members of the group have over it. One way broadly treats the entity as opaque (see IFM22330); the other treats the entity as transparent and takes account of the activities carried on by the entity (see IFM22335).