Portuguese ‘SIGI’ finally approved by Parliament

After a previous false start, the Real Estate Investment Companies or Sociedades de Investimento e Gestão Imobiliária (SIGI) are now ready to launch in the Portuguese market.  This comes after the final legislation was approved earlier this month in Parliament.

The hindered start came from problems with the broad original wording of the legal framework - with some understanding that it allowed for the investing into both leasing (their main purpose) and real estate development. 

To eliminate this confusion MPs approved an amendment to the purpose, which describes the primary function of a SIGI as “the acquisition of property rights, surface rights or other rights with equivalent content in real estate, for rent, covering atypical contractual forms that include the rendering of services necessary for the use of the property”. 

Furthermore it has been confirmed that SIGI’s, while having the same tax regime as investment funds, only benefit from tax exemption when the properties have been held for lease. This would suggest a clear incentive to focus on leasing. 

The market recognises SIGI as a new financial tool for investing in real estate. These REIT-like entities are public limited companies that are listed on the stock exchange and have shares admitted to trading - currently at least 20% of the shares corresponding to a minimum of 2% of the voting rights must be dispersed capital. 

Cristina García-Peri, Managing Partner at Azora Capital, said “Portugal offers unique attractive investment opportunities across many different sectors. In particular,  the hospitality sector, where Azora is a market leader, has prime locations and top tier operators which provide a winning combination to offer investors superior risk-adjusted returns.” 

“A liquid listed market with the right regulatory framework will provide visibility to the sector, liquidity for local investors, and enhanced transparency all of which lays the ground for increasing international investors interest and hence, valuation gains.” 

For further insight into SIGIs, our previous article can be found here

For more information on the Portuguese market, Europe GRI 2019 takes place on 11-12 September in Paris and Portugal GRI 2020 takes place on 27-28 May in Lisbon.
 

Article by Matt Harris