Giant German fund manager CGI has added to the pressure for Germany to establish real estate investment trusts by setting up a REIT in France.
Moves to introduce G-REITs have been mired by opposition from the left wing of Germany’s Social Democratic Party and by fears of a potential tax haemorrhage.
But CGI’s move will renew pressure for the introduction of G-REITs at a time when domestic investors’ confidence in Germany’s open-ended funds has plummeted.
The country’s largest open-ended property fund, CGI’s Hausinvest Europa, transferred three Paris offices to a new public company, CeGeREAL.
CeGeREAL which was set up as a SIIC, France’s REIT equivalent was launched on the Euronext Paris Stock Exchange at the end of March.
There was a free float of 28.7%, which was valued at €122m on the back of an issue price of €31.80 per share. Hausinvest Europa holds the remainder.
CGI said last week that SIIC status would enable fund investors to save €6m in income tax pa, and would cut its deferred tax burden on sales profits by 50% worth around €88m.
CGI management spokesman Dr Frank Pörschke said the tax benefits to its investors “are enormous, and the yield of Hausinvest Europa is boosted”.
He called on the German government to introduce REITs as a necessary addition to their product range.
“Our diversified open-ended property funds cater for the needs of the more security-orientated and stock exchange-wary investor.
REITs, by contrast, enable us for the first time to reach investors with an affinity towards equity who wish to invest in a specific real estate segment.”
The news emerged as the chairman of the REIT commission, Leo Dautzenberg, who is also head of the Christian Democrat parliamentary group, said he was confident that it will be possible to introduce REITs in Germany in early 2007.
Party colleague Hans-Peter Friedrich added: “Time is pressing. The fact that CGI floated a REIT in France, he said, is “a hazard warning”.
References: EGi News 13/04/06
