SIGI failure in Portugal – idealist / news
A regime equivalent to the North Americans was long awaited REIT (Real Estate Investment Trust), for the country to become – even more – a magnet for real estate investment International. And, in July 2019, the Portuguese Parliament approved the formation of the so-called Investment and Real Estate Management Companies (SIGI). Since then, only one has been created. SIGI – ORES Portugal. Why? The fiscal transparency regime does not seem to invite international investors. And Euronext admits that there are aspects to reformulate and it even hopes to be able to debate changes with the next Government.
But after all, what is special about SIGI? They are companies listed on the stock exchange, which seek to invest in real estate and then place it on the rental market and generate income. But, of course, there are rules to follow that say, for example, that 75% of the total value of the portfolio must be leased for at least 3 years. In addition, Portuguese law also says that 20% of the capital of SIGI it must be dispersed among small investors and that 90% of the profits must be distributed in the form of dividends, Refer to the ECO.
How high expectations were for players real estate sector. But so far only one SIGI has been created. This is ORES Portugal, launched in December 2019 by Sonae Sierra and Bankinter, who decided to replicate in Portugal the model that they already had in Spain – the Sociedade Anónima Cotizada de Inversión in the Mercado Inmobiliario.
The market also expected the creation of a SIGI by Merlin Properties, a Spanish SOCIMI that has several investments in portugal. João Cristina, CEO of Merlin in Portugal, explained that “we would like to be a SIGI but, as they are regulated, [a lei] does not allow us”, cites the same medium.
What remains to change the SIGI regime?
There is a lot to change in this regime for you to attract more investors nationals and internationals. In João Cristina’s opinion, “the regime of certain SIGI is, in a way, limited to Portuguese companies” and this blocks entry International REITs in the country. THE fiscal transparency regime SIGI is, without its meaning, one of the main obstacles to the adhesion of investors. This is because “if an international REIT wants to invest in Portugal, it has to form a SIGI and spread the capital on the stock exchange”, which does not happen in other countries like Spain and France where the same tax regime applies, he explains.
In an interview with idealista / news, published in June 2020, Ismael Clemente, CEO of socimi Merlin Properties, explained that “what still doesn’t work is the intra-European reciprocity mechanism, that is, we are not yet entitled to acquire the SIGI regime simply because we are a SOCIMI. In Spain this is possible, but not in Portugal, that is, because we are SOCIMI in Spain we cannot, we have no right, to be automatically SIGI in PortugalBoth Merlin Properties representatives believe the Portuguese government will review the regime at this point.
also the Euronext identified that it may be necessary to change the IMIS regime to attract more investors. And these changes lead to a reduction in the investor participation threshold, which currently has to have at least 11 shareholders with less than 2% of capital to make up a minimum of 20%, referring to the ECO.
Another change to the regime involves the “refinancing of credits for acquisition of real estate assets”, this is no longer “considered in the calculation of SIGI’s assets”, said Isabel Ucha, president of Euronext, cited in the same publication. The official also said that she hopes to discuss these changes in the regime with the next Government.