Real estate management

Real Estate Investment and Management Companies (“SIGI”) – a new vehicle to promote investment and the real estate market in Portugal

Decree-law no. 19/2019 of January 28 (“DL 19/2019”), approving the legal regime of real estate investment and management companies (“SIGI”) – a new vehicle to energize and promote investment in the real estate market, in particular the rental market – entered into force on 1 February 2019.

The main activity of SIGIs is the acquisition of real rights, for the purpose of renting or operating buildings, the acquisition of holdings in companies having a corporate purpose and equivalent legal conditions, and the acquisition of shares real estate investment funds with similar profit distribution policies.

The main aspects of the SIGI legal regime are as follows:

1. Minimum share capital: the minimum share capital subscribed and paid up in the SIGI is 5,000,000.00 euros (five million euros), in the form of ordinary shares;

2. Shares admitted to trading: SIGIs take the form of public limited companies (sociedades anónimas) – with or without a public offer – and all the shares representing the share capital must, within one year (from their registration or from the date of conversion of an existing public limited company or real estate investment company in a SIGI) be admitted to trading on a regulated market or selected for trading on a multilateral trading facility located or operating in Portugal or in any other Member State of the EU or in the European Economic Area;

3. Asset portfolio: The portfolio of assets of SIGI must consist mainly of property rights, surface rights or other equivalent rights in immovable property (for the purpose of leasing or operating immovable property), within certain limits ( cumulative) – (a) the value of the rights in real estate and equity interests must represent at least 80% of the total value of the portfolio of assets of the SIGI and (b) the value of the rights in rem for the purpose of leasing or The operation of real estate must represent at least 75% of the total value of the SIGI asset portfolio;

4. Distribution of income: within nine months of the end of each financial year, SIGI must distribute, in the form of dividends, at least (a) 90% of the profits for the financial year resulting from the distribution of dividends and other income from the shares and units held, and (b) 75% of the remaining profits which are distributable according to the Portuguese Companies Code. In addition, at least 75% of the net proceeds from the sale of assets relating to the main corporate purpose of SIGI must be reinvested in other assets related to the achievement of the same purpose, within three years of the date of the respective assignment. The SIGI legal reserve must not exceed 20% of the share capital and the creation of other non-distributable reserves is not authorised.

5. Maximum debt: given the need to ensure the stability of the national financial system, the maximum indebtedness of SIGIs may not exceed, at any time, 60% of the total value of their portfolio of assets.

The SIGI legal regime includes specific provisions relating to the dispersion of share capital.

Considering that SIGIs are a new form of real estate investment company whose objective is to stimulate and promote investment in the Portuguese real estate market, SIGIs will benefit from a neutral tax regime applicable to other real estate investment companies. which are incorporated and operate under the laws of Portugal.

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