Merlin and Colonial, the two largest listed real estate investment companies (SOCIMI) in Spain, on Wednesday threatened the government with leaving the country if the tax plan agreed between the PSOE and Sumar was approved. Last Monday, the two groups agreed to “remove” the special tax regime for these companies (for which they pay 1% corporate tax), “which has not served to improve the supply of housing”.
Merlin and Colonial, the only two SOCIMI listed on the Ibex 35, and which are mainly dedicated to office rental, have spoken out against this project after having led the falls of the Ibex on Tuesday and having collapsed by 7, 3% and 5% respectively.
The first to get up was Merlin. The largest real estate agency in Bouquetin announced in a press release addressed to the National Securities Market Commission (CNMV) that it was studying different scenarios and emergency plans, for the defense of its shareholders, clients and employees, “without exclude any legal possibility within its scope”.
Although there is no evidence that to date the budget agreement between the PSOE and Sumar will have “sufficient political and technical consensus for its approval”, Merlin will calculate, in the short term, the effective impact on the “cash flow” of that agreement. . tax proposal, which, in any case, provides that it is “limited” by the joint effect of various tax regulations.
In the medium and long term, Merlin will focus its evaluation on determining the measures to adopt to safeguard the interests of shareholders, customers and employees, without excluding legal action.
The company recalls that SOCIMI are the equivalent in Spain of real estate investment funds (REIT) and regrets that the tax changes introduced in the PSOE-Sumar agreement “represent, in practice, the abolition of the SOCIMI regime”.
The company founded and managed by the Extremadura financier Ismael Clemente defended that there is a “clear” economic justification for the Spanish version of the regime known as international REIT, “based on the introduction to the market of active business structures, with means and personnel directly involved in the activity (as opposed to funds), which are responsible for promoting, building, acquiring and operating the infrastructures necessary for the different economic sectors (offices, shopping centers, logistics , data centers, hotels, parking lots or telephone towers).
All this, he adds, “with daily liquidity and as a form of savings popular with individuals and essential to the proper functioning of pension funds, investment funds, mutual funds, investment companies, etc. insurance, family offices and sovereign funds.
“Very serious”
For his part, the president of Colonial, Juan José Brugera, indicated in statements to Europa Press that the agreement is “very serious” and would make Spain a “forbidden territory” for international investments and that, if it was approved, it would rethink its strategy and the location of its activities.
“The changes that some are proposing are very serious. The socimi regime is nothing other than the adaptation to the Spanish case of the standard established in international markets. This type of modification transforms the Spanish market into a territory prohibited to international investments.
According to him, the legal framework must protect companies that have chosen to attract international investments and make it compatible with the best social objectives.
Regardless, Brugera defends that Colonial’s current economic model is diversified in different geographic areas, with a significant presence in the Parisian market, which allows the group “great strength in scenarios of fragility of the regulatory framework.” .
“If the reform of the legal regime of Socimis is approved, Colonial will reassess its investment strategy, the location of its activities and its legal structure, and will adopt, where appropriate, the measures best suited to the interests of its shareholders and investors, all with the aim that these potential measures do not have a negative impact on society.
The PSOE and Sumar reached a tax agreement on Monday aimed at taxing banks, tourist apartments and yachts, which also includes the removal of the special tax regime for socimis. These companies are dedicated to purchasing real estate assets, such as apartments, offices or shopping centers, to rent their spaces to tenants, businesses or stores in exchange for rent, without having to pay any fees. taxes on the profits that they distribute to their shareholders.
The SOCIMI regime requires these companies to distribute at least 80% of profits to their shareholders, to have all their acquisitions in their portfolio for at least three years, to be listed on the stock exchange, to have a floating capital of 25% and to distribute a minimum of 50% of the profits generated by the sale of real estate or shares.
The regulation of SOCIMI in Spain was established in a 2009 law, in the context created by the bursting of the real estate bubble, in order to provide liquidity to investments in the real estate sector, ensuring a continuous flow of investments through to the savings of investors. , although its explosion occurred after a regulatory change introduced by the government of Mariano Rajoy.
At the end of the 2023 financial year, there were 116 SOCIMI listed in Spain, positioning the country as the leading market in Europe in terms of number of SOCIMI, with a market capitalization of €24 billion.
