D7.1106 Conditions for balance of business
In addition to meeting the conditions set out in D7.1104, D7.1105, and D7.1105A, in order to be within the REIT regime the company must meet two conditions relating to the proportion of property rental business undertaken by the company compared to 'residual business' (defined as business that is not property rental business)1.
Firstly, in respect of each accounting period, the profits of the property rental business must be at least 75% of the aggregate profits earned by the company. The aggregate profits are defined as the sum of profits from the property rental business (and includes income from other UK REITS which the UK REIT has invested in2) and the residual business.
For these purposes, profits are accounting profits calculated under International Accounting Standards, with certain adjustments to disregard realised and unrealised gains on the disposal of property, changes in the fair value of hedging derivative