Punch Taverns took a step back from the U.K. real estate investment trust frontline and joined other U.K. pubs that remain sidelined on the benefits of converting to REIT status.

Since their launch in the U.K. at the beginning of this year, REITs have been well received by the traditional listed real estate companies, the ones that own properties with a number of different tenants operating in different industries. Rising immigration and higher house prices will continue to bolster the U.K. rental market, sources said. "For an operating company that also owns real estate [namely pub chains], in order to comply with the criteria to become a REIT, there would be a need to separate the property from the operations by using an opco/propco structure," said Michael Cox, a property, corporate and infrastructure securitization analyst at the Royal Bank of Scotland.

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