Portuguese real estate enters REITs’ market on the 1st of February

Portuguese real estate enters REITs’ market on the 1st of February



Promised since 2015, the SIGI (REITs) mark Portugal’s entry in the Real Estate Investment Trusts (REITS) international market, a consolidated industry which is expected to allow the diversification of financing for the companies and attract direct foreign investment.

According to the regime published this Monday, SIGIs’ main activity is the acquisition of effective rights over buildings, for rental (or other types of economic use), suggesting a preference for housing rental, which is not mandatory, and also covering urban renewal and offices as preferred areas. But SIGIs may also assume as their main activity the acquisition of shares in societies with similar goals and requirements, that is to say, SIGIs, and the acquisition of shares from real estate investment funds with similar income distribution.


SIGI shares are mandatorily traded in the stock market

Besides having a minimum of 5.000.000 euro in shares, SIGIs must be listed in the stock market, with small shareholders with less than 2% of the shares each holding at least 20% of the shares.

The law also states the mandatory distribution of a significant part of the distributable profits (75%) and 90% of its subsidiaries’ profits, if they have subsidiaries, as well as having to keep invested 80% of its capital stock, and of that, 75% in rental or another type of economic use.

Adding to these requirements there is also an important debt ceiling, which can’t go beyond 60% of the SIGI’s total asset value.


Public limited companies may convert into SIGIs

PLCs may convert into SIGIs, upon deliberation from a shareholders’ general meeting, and provided the society’s contract is altered so that it satisfies all the legal dispositions required by the SIGI regime. The Organismos de Investimento Imobiliário (OII) – Real Estate Investment Entities, operating as societies, established under the Regime Geral dos Organismos de Investimento Coletivo (RGOIC) Colective Investment Entities Regime, may convert into SIGIs as well.

The SIGIs «will benefit from the neutral tax regime aplicable to all other real estate investment societies established and operating according to the national legislation», it can be read in the preamble to the decree - Decreto-Lei n.º 19/2019. Therefore, these societies will be under the same regime as most real estate investment societies, like SICAFI - Sociedades de Investimento Imobiliário Autogeridas de Capital Fixo (Self managed fixed capital real estate investment societies) for example, and which establishes taxation only to the share distribution among the shareholders, abstaining from taxing the societies’ capital gains and rental income.

The decree will come into effect on the first day of the month following its publication, that is on the 1st of February 2019.

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