Following the success of their Spanish REIT, Bankinter & Sonae Sierra have launched a new JV to invest in the Portuguese property market and take advantage of the country’s new legal framework.
Olimpo Real Estate Portugal SIGI (ORES Portugal) has a target volume of c. €500M and aims to invest 70% of its portfolio in Portugal and the rest in Spain. Although it will be mainly focused on retail high street and warehouse properties it will also be able to invest in offices.
The REIT is managed by Vitor Freitas Duarte who joined Sonae in 1997 and has held various positions ranging from Investor Relations at Sonae SGPS to Project Manager at Sonae UK. In 2004 he joined Sonae Sierra as a Finance Manager and, three years later, he assumed responsibilities as Senior Manager for New Projects and Acquisitions in Europe. In 2010, he was also appointed Corporate Controller with responsibilities for information systems and European back offices. In 2017 Vitor moved to the Madrid office with responsibilities for the investment and management of ORES Socimi and developing new investment vehicles.
Decree-Law no. 19/2019 came into force on the 1st of February 2019 and established a new legal framework allowing the creation of Real Estate Investment and Asset Management Companies (Sociedades de Investimento e Gestão Imobiliária) or SIGIs.
Like Spanish REITs, they have a minimum share capital hurdle of €5,000,000, obliged to distribute profits and the shares of these vehicles must be listed. A main difference is that they are subject to strict free-floating requirements and also have limitations regarding diversification and indebtedness which cannot exceed 60% of the fund’s total assets.
SIGIs benefit from a favourable tax regime characterized by a corporate income tax exemption on income received by the SIGI and considered as having a “passive” nature. In addition, taxation occurs at investor level mainly via withholding tax on both income distributions made by the SIGI to its shareholders and capital gains arising from the sale of its shares at a rate of 10% (for non-residents) and 25% or 28% (in the case of residents).