Events CPN Dallas/Fort Worth Property Opportunities Conference Tuesday, August 28, 2007 7:15 a.m. to 2:15 p.m. Hilton Anatole Dallas, Texas

	1,900 employees 45 offices, 28 countries $59 billion in assets $78 billion served assets

 

Foreign Exchange
Germany Approves REITs

After several months of wrangling and debate, Germany’s parliament passed REIT legislation in March 2007. The new legislation, which calls for G-REITs to operate like their UK equivalents, is retroactive to January 1, 2007.
To qualify as a G-REIT, the organization must:

1. have a free float of at least 85 percent
2. have no shareholder hold more than 10 percent of the fund
3. pay out 90 of income as a dividend
4. obtain 75 percent of profits from real estate

German REITs, which will offer largely the same tax advantages as US and Australian-based property trusts, will pay roughly 20 percent of capital gains and will be limited to 60 percent debt loads.

Any commercial property can be placed into a G-REIT structure; however, any residential properties built before 2007 are prevented from being included into G-REITs. There was some concern that allowing homes to be held within REITs could have a negative impact on tenants, as well as cause problems for sustainable city development and social housing policies. Experts estimate that excluding residential property from REITs will cut market capitalization by 14 percent and 19 percent.

A number of industry experts predict that as many as a dozen G-REITs could be established by the end of this year and G-REIT investment could eclipse €100 billion by the end of this decade. Experts also speculate that G-REIT legislation will be modified within the next five years to include residential property.

Copyright 2007, Penton Media.. All rights reserved. This article is protected by United States copyright and other intellectual property laws and may not be reproduced, rewritten, distributed, re-disseminated, transmitted, displayed, published or broadcast, directly or indirectly, in any medium without the prior written permission of Penton Media.