K&C's property acquisitions will focus on London and the South East and, to a lesser extent, K&C may consider areas across the rest of the UK where both capital and rental growth are expected to be strong in the coming years. K&C aims to create an attractive blended portfolio of residential assets. In the majority of cases, acquisitions will be of SPVs holding real estate assets, although we may on occasion make direct real estate acquisitions. The majority of properties acquired are expected to be held for a minimum of three years.
Acquisitions will be funded either through issuing new ordinary shares to vendors, utilising the company's cash resources and access to debt, or a combination of these. The level of any borrowing secured against acquisitions will be no more than 50 per cent. loan to value.
The Board reserves the right to review and potentially change the company's investing policy and activities from time to time. Any material change would require the approval of shareholders in a general meeting. The company has an indefinite corporate existence.
The company has no constitutional borrowing limits. The REIT regime imposes an interest-cover test whereby proﬁts of the tax-exempt business of a REIT group must be at least 1.25 times the costs of ﬁnancing that business. If this condition is not met, the company will be required to pay corporation tax on an amount of income equivalent to the excess ﬁnancing costs or 20 per cent. of the tax-exempt business proﬁt if that is less.
The REIT regime requires that the company distributes, on or before the filing date for the company's tax return, an amount equal to (a) at least 90 per cent. of the profits from the group's qualifying rental business in the UK, and (b) in the event a member of the group were to receive a distribution from another UK REIT (qualifying as "REIT development profits" within the meaning of section 549A of the CTA 2010), an amount equal to that distribution; if the company were not to distribute such amounts, it would suffer a charge to corporation tax.