REITs Coming Soon to Germany?

Legislation authorizing the REIT structure is likely to take effect in Germany next year, according to a participant in the annual convention of the National Association of Real Estate Investment Trusts in San Francisco.Lutz Ristow, chief executive officer of TAG Tegernsee Immobilien, said at a global summit session that the first draft of German REIT legislation passed the German Cabinet on Nov. 2 and that the legislation is likely to go through the entire legislative process by the end of the year. Even if it takes longer, the legislation is likely to be enacted with retroactive effect to Jan. 1, 2007, he said. The German government's sole concern relates to the loss of any tax revenue, and the legislation calls for a payout of 90% from the REITs to shareholders (similar to the U.S. REIT format), which will be taxed at the individual shareholder level. Residential properties are not allowed in the REIT format in the first draft, but Mr. Ristow said he sees a better than 50% chance of getting residential REITS in later versions of the legislation.