Isabel Ucha, Euronext Lisbon’s CEO
The Sociedades de Investimento e Gestão Imobiliária (Real Estate Management and Investment Societies), better known as SIGI, and similar to the Spanish SOCIMIs, are an important financial instrument to attract more investors into the real estate market and which «can be very useful for a great variety of sectors within the Portuguese economy».
During an interview to Vida Imobiliária, Isabel Ucha, Euronext Lisbon’s CEO, remarked that SIGI’s «goal is to manage rented real estate assets. They are a useful instrument, because it allows us to separate real estate management from the business transaction itself, avoiding spending too much capital, for example», she explained.
One of the main advantages is the tax regime. «These companies have an internationally well-known and very favourable tax regime with Tax Transparency, according to which income is only taxed when received by the investor and not through corporate taxation».
On the other hand, they open other opportunities «to all types of investors» who will not thus, need to invest in purchasing a building, which can attract more capital to the real estate sector. «It may be used to finance, for example, an hotel chain, hospitals or student residences. Many sectors may benefit from this instrument, and we have to make an effort to promote it more, especially within a context where companies will need more financing», during the post-pandemic recovery.
Ores SIGI, from group Sonae is already listed and it invests mainly in retail. On the other hand, there are two SOCIMIs listed at Euronext Lisbon, one of them is Merlin Properties, one of the largest SOCIMIs listed in Spain.
«Green Bonds», a new instrument to finance real estate activity
Green bonds are an example of a financing instrument designed to promote real estate investment. They have had an exponential growth during the last few years, according to Isabel Ucha, and «there is a significant demand from investors».
Euronext’s CEO explained that «these bonds apply the funds into environmental, social or governance projects, or companies with great commitments towards sustainability, which can also issue these bonds». Examples of that are renewable energy, electric mobility, residue cleaning, social projects or the creation of affordable housing. These mid to long and very long-term projects, must also be externally certified attesting the funds are being applied according to the company’s commitment and that the goals are being reached.
Several Portuguese companies have already issued green bonds, such as EDP, Bioeléctrica do Mondego, Grupo Pestana and Corticeira Amorim, among others. «We are aware that there are several other companies interested in this instrument», said Isabel Ucha, who attested that, right now, «the total number of green bonds has already surpassed 10% of all bonds issued in Europe», which shows the interest in these bonds, with «demonstrably lower financing rates».
And she concluded that «within the real estate sector there is a whole context related to sustainable construction, for example. The capital market can work as complementary financing».
Segments adapted to several company types
Isabel Ucha remarked that there are several markets which allow the quotation of all types of vehicles, from large vehicles listed at the main Stock Exchanges to smaller ones listed at smaller Stock Exchanges, which allow the listing of smaller vehicles and provide them access to the SIGI’s tax efficiency instruments, mainly through Euronext.
Euronext allows investment on all segments of this type in accordance with international standards. Besides green bonds, blue bonds, connected to water and ocean projects, are also included.
On the other hand, Euronext’s infrastructure has segments adapted to several company types, such as the regulated market, or Euronext Access (without any free float or minimum admission restrictions) through which SIGIs can enter the market.
Isabel Ucha guaranteed that «markets are extremely active, with the expectation that the economic recovery will come soon, and are showing a lot of confidence. There is plenty of liquidity, very low interest rates and that encourages investors to seek more potential income and bonds are one of the instruments they are looking for», she concluded.