German SPD makes small concession in REIT row

The German Social Democrat Party SPD has signalled it may agree to a partial inclusion of residential properties in legislation to introduce real estate investment trusts (REITs) in Germany. A party spokesperson said in an interview that the SPD still opposes REIT eligibility for purely residential properties, but may approve mixed commercial-residential properties, news service Bloomberg reported.

The SPD shares power in Germany with Chancellor Angela Merkel's Christian Democrats CDU/CSU. Finance minister Peer Steinbrueck (SPD) and the CDU/CSU are pushing for the introduction of German REITs (G-REITs) next year but the left-wing of the SPD has to date been opposed, mainly because of fears investors would swoop on housing stocks and drive up rents. Bowing to pressure from the left, Steinbrueck agreed earlier in the week to exclude housing from the REITS legislation which is to be presented for discussion in November. The CDU/CSU has urged the minister to stand firm and present the legislation in its original form. The apparent concession by the left of the SPD may help to break the impasse. However the SPD spokesperson cited by Bloomberg said the Social Democrats would never accept the proposed 20% exit tax, another sticking point in the current REIT draft.

The German cabinet is to debate the legislation on November 2, and the law is expected to come into effect on January 1 2007.