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CAPITAL MARKETS

Italians take a step in the Reit direction

The second set of regulations for Italian Reits were announced in April to the delight of many investors. It is thought that the Italian Reit, the Società di Investimento Immobiliare Quotare (SIIQ) could be the first step towards improving transparency in the Italian markets and increasing liquidity on the Borsa Italiana.

The economic ministry’s decree allows for the creation of a SIIQ market with a framework similar in many ways to the French model. Tax incentives will be given to companies that contribute their rental real estate assets to SIIQs. Companies with SIIQ status will be exempt from paying value-added tax and the corporate IRES and regional IRAP tax.

But, despite these advantages, strict requirements need to be met if a company wants to convert to SIIQ status. The listed company must have no shareholders owning, directly or indirectly, more than 51% of voting rights and 51% of rights to dividend distributions, and at least 35% of shares must be owned, directly or indirectly, by shareholders with no more than 1% voting rights and 1% of rights to dividend distributions. And at least 80% of a company’s income must be derived from the rental business.

"I don’t think there is suddenly going to be a rush of companies entering the SIIQ market or listing," says Sara Bellenda, head of properties and equities at Henderson Global Investors. In fact only two companies are believed to fit the criteria at this stage, Beni Stabili and Immobiliare Grande Distribuzione, a company that specializes in the rent of hypermarkets to retailers.

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