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Merlin waits for European passport to create SIGI
14 February 2020 | Vanessa Sousa

One month after debuting at the Euronext Lisboa with the dual-listing system, Spanish Merlin Properties revealed that it is awaiting the introduction of the European Passport in Portugal to create a SIGI – Sociedade de Investimento e Gestão Imobiliária (Real Estate Investment and Management Society).

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Photo By Marildo Montenegro | Iberian Property

The information was confirmed by Merlin Properties’ CEO Ismael Clemente during the third edition of the Iberian REIT Conference, thus revealing that as soon as the European passport is incorporated «all our activity within the country will fall under the scope of a SIGI».

The introduction of the abovementioned European passport – which already exists in Spain – would facilitate the entry of REITs and SOCIMIs (Spanish REITs) in Portugal, since it would allow them to create a SIGI gathering a set of real estate assets in the country. But, «since the European passport does not exist in Portugal, we would be forced to gather all the assets in a Portuguese company, list it in the Portuguese market and have 20% free float» explained Ismael Clemente quoted by Cinco Días.

Assuming that «the integration of the SIGIs was not perfect», Ismael Clemente also called out for the revision of the SIGI’s current tax regime which, according to him, is not efficient. The current Portuguese government has no plans concerning these changes, but the Spanish giant’s CEO believes this is a subject that will be taken to the table to be discussed and which will lead to a set of «legal changes which will tend towards technical perfection», as was the case with the Spanish Socimis.

For 2020, the strategy is: add value

With the creation of a SIGI still in the distant future, this year Merlin Properties should focus on adding value to its current portfolio, not only for those assets located in Spain but also for the 10% located in Portugal. The acquisition of assets is, for now, suspended.

This strategy follows the yields’ compression, Ismael Clemente believes that this year there will be a slowdown in investment, which he sees as a «normal consequence of the cycle».  

Despite the slowdown, the CEO believes that «this will be a great year. I don’t think this will be a year with great macroeconomic shocks and things should go well in Spain if no extreme measures are taken», concerning the current SOCIMI legislation.