To boost the attractiveness of the local REIT regime, the Italian government has signed a new decree called 'Unblock Italy' which is expected to put the vehicle's tax-efficient status on an equal footing with the successful Spanish and French legislations.

To boost the attractiveness of the local REIT regime, the Italian government has signed a new decree called 'Unblock Italy' which is expected to put the vehicle's tax-efficient status on an equal footing with the successful Spanish and French legislations.

Signed by prime minister Matteo Renzi last Friday, the decree will also bring the so-called Società di Investimento Immobiliare Quotate (SIIQs) into line with the country's closed-end property funds.

The main changes to the regime include raising the investment threshold for single main shareholders to 60%, as in France; a lowering of the minimum free float to 25%; the cancellation of capital gains tax to address the competition between the SIIQs and local closed-end funds, as well as a legal commitment to distribute 50% of the capital gains over a two-year period, as in France, and the planned reduction of the dividend payout requirement from 85% to 70% of the property business income.

According to Henri Quadrelli, an analyst at Société Générale, the softening of the current SIIQ rules will benefit Italy's minuscule listed real estate sector, helping it to attract more foreign investors as well as facilitating new IPOs.

In a report named 'The beginning of a new story', Quadrelli said that the decree will allow property funds to more easily convert to REIT status as tax transparency will also concern property fund management activities and not only direct property-owned rental businesses, while the lowering of the dividend payout commitment means companies will be able to conserve cashflow.

Société Générale's Quadrelli said he expects more IPOs to take place in the future, with banks expected to take part in the action after the next ECB stress test. A larger listed sector is also expected to bring more transparency into valuations, which in turn means a more attractive sector for international investors.

Italy, which introduced the REIT regime in 2007, has only seen the launch of two structures over the past years. Beni Stabili, the Italian arm of Foncière des Régions, is currently the largest SIIQ in the market, followed by IGD, a Bologna-based retail specialist.