Alstria has become the first real estate investment trust (REIT) in Germany.
The listed company invests in German offices.
“This is a milestone in the young life of our company,” said Alstria chief executive Olivier Elamine.
The company, founded in 2006, owns and manages a €1.6bn portfolio of 70 offices across Germany with a total floor space of 700,000 m2.
Elamine said the conversion was also good news for the market as a whole. “It demonstrates that the REIT law is workable,” he said.
The German REIT has been criticised for its many restrictions that discourage firms from converting to a REIT.
Residential property is excluded and there are limits on gearing and trading assets. Losses carried forward cannot be applied after a company converts to a REIT, and reserves are fully taxable.
These restrictions led HSH Nordbank to earlier slash its expectations for the REIT market as a whole to €15bn-€40bn from previous expectations of €30bn-€60bn.
Alstria paid around €300,000 in legal fees to convert to a REIT, but it is still in talks with the tax authorities about the conversion charge. The company and the tax office need to agree a deal on the capital gains tax on liabilities as at 31 December 2006.
“We have some figures in mind, they have some figures in mind and at the end of the day we’ll have some sort of compromise,” said Elamine.
