The Portuguese government has approved a decree to launch REITs in the country.
To be called SIGIs, Portugal’s REITs will be structured with similar parameters to those in other European countries.
SIGIs will be able to undertake limited development providing rental income-producing assets make up 80% of their portfolios by value. In return for tax-efficient status, they will be required to have a three-year minimum hold period for assets, and to distribute dividends annually.
They can also own stakes in other REITs or in real estate investment funds that have a similar income distribution strategy.
Portuguese experts hope SIGIs will develop into a well capitalised and sophisticated sector which could replace some of the opportunistic capital investing in the last two to three years.
Sources say that domestic property investors Norfin and Square Asset Management are potential candidates to convert.
Merlin Properties, listed in Spain and the largest Socimi investing across the Iberian peninsula, could consider setting up a SIGI.
Merlin’s latest additions to its Portuguese portfolio are two office buildings in Parque das Nações in Lisbon, called the Art’s and the Fernando
Magalhães tower.
Merlin paid a total of €112.2 mln to an international investor for the assets in another play on the strong rental growth coming through in the city.
The initial yield is 5.4% but the estimated rental value would represent 6.2%.
Cushman & Wakefield advised the vendor.
This article first appeared in EuroProperty, PropertyEU's sister publication.
