In Spain there are investment rates such as the open-ended real estate funds. It is noteworthy that 50% of the real estate portfolio of a fund must be held in the form of flats. This is exactly the kind of investment rate that is now dispensed with by the SOCIMI law, contrary to initial fears from all sectors.
According to the draft, SOCIMI can now be established in Spain under the following conditions:
- At least 75% of assets must be invested in rented properties without limits. This includes housing, office buildings, commercial properties, retirement homes, students housing, hotels or even parking spots or parking garages.
- The minimum share capital for a SOCIMI must be 15 million Euros.
- The listing is mandatory.
- At least 90% of rental income and added value must be distributed as profits.
- The share of a SOCIMI – shareholder is limited, with the extent of the corresponding % rate still to be determined.
Currently not all conditions have been established, such as the aforementioned maximum share amount for shareholders or the legal form by which the existing property companies can benefit from REITs regulation. These will be determined at the end of the year as soon as the government presents a draft law to Congress to be submitted.
Now, in drafting the SOCIMI law by the end of this year, it remains to be seen if the Social Democrat Rodriguez Zapatero will heed the lessons of other countries who introduced overly rigid regulations which ultimately impeded the practical application of REIT from the outset.
Source: Sunday edition of the Spanish newspaper “El Pais” of 28 September 2008
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