The Italian changes include lifting the maximum stake a single investor can hold in a REIT, known as a SIIQ in Italy, to 60% from 51%, according to a decree published in the state bulletin on Sept 12. It also reduces the amount of recurring rental income the company must distribute to investors to 70% from 85%.
“Italy’s government has clearly had an eye on the robust health of the French REIT sector and how the changes to the regime in Spain and the launch of the structure in Ireland have spawned a series of successful IPOs,” said Philip Charls, chief executive of the European Public Real Estate Association.
Reviving Italy’s slumping property market is key to Prime Minister Matteo Renzi’s plans to sell assets including publicly held real estate to bring in revenue as the country tries to trim its €2.2 trillion of debt. Italy may fail to achieve its fiscal targets for this year after the country’s economy unexpectedly contracted in the second quarter.
The Italian rule changes “are clear and very welcome,” Aldo Mazzocco, chief executive of Italian REIT Beni Stabili SpA, said by email. “These are very important decisions that align Italy with the best European real estate markets.”
Spain reduced the tax burden for REIT investors starting last year to boost investment after real estate values fell more than 40% from their 2007 peaks.
Pacific Investment Management Co’s Gross, Soros’s Quantum Partners LP and Paulson & Co. head John Paulson have since taken stakes inSpanish REITs that have staged IPOs in recent months.