In order to fulfil the requirements of the Spanish law, AIREF goes even further and suggests that, for example, «a maximum share limit per shareholder should be established», it can be read in its latest study on Tax Benefits published this Thursday, which points out that the current situation creates «doubts about the collective nature of investment». This is especially true for the SICAVs (Variable Capital Investment Societies) regime which follows the «reinforced requirements of the Spanish norm», which defines 100 as the minimum number of shareholders.
AIREF mentioned in its analysis that «the number of REITs is still small and the market is still very concentrated since four companies practically represent all the capitalisation on this type of societies». The 4 companies are Merlin Properties, Colonial, Galerías Comerciales and Hispania which last year added a capitalisation of 15.4 million euro within a total for all REITs of 24.6 million euro, according to data from BME155. On the other hand, AIREF points out that the attraction of foreign capital by the REITs has «increased considerably» over the last three years, although this regime has only been around for 11 years.
In the same document, AIREF assumed that there aren’t enough elements to allow it to conclude the existence of a direct connection between tax benefits and the increase on real estate investment. And it explains that currently «there isn’t enough information to know whether there is new investment or if it is generated by other financial assets».
It should be noted that the REITs were created in Spain in 2009 with the goal of boosting investment on all types of real estate assets. Amongst its main tax benefits is the 0% tax on societies and the exemption of being taxed on dividends. It was precisely this last tax benefit that the Spanish Government called into question last December, suggesting to tax non distributed benefits at 15%. As was to be expected, this measure was not well taken by the directors of the main Spanish REITs.