Socimis are Real Estate Investment Trust Corporation listed in the Spanish Real Estate Market.
On their moment of foundation, the socimis need to have a minimum capital of €5 million.
A socimi is a Real Estate Investment Trust Corporation listed in the Real Estate Market, what in the financial market of the US born in the sixties with the name of Real Estate Investment Trust (REIT). Socimis do have to be listed in the European or Spanish market; in Spain you can usually find them in the MAB – Alternative Stock Market, where there is a segment for the socimis’ investment, even though they can also ask to get into the Spanish Stock Exchange Market, under the supervision of the National Commission of the Stock Market (CNMV).
On their moment of foundation, the socimis need to have a minimum capital of €5 million; part of it can be from assets-real estate, which can be found either inside the country they are being listed, or internationally. There is a chance that the total of its investment may be just a single asset.
The main activity that socimis do is promote, acquire and rehabilitate real-estate assets, what means bettering the Spanish Real Estate Park as promoting the real-estate sector, specially those assets for renting. It is mandatory that at least the 80% of the total of the portfolio of real estate assets is dedicated to rent. This can be integrated by apartments, commercial premises, offices, parking, industrial place, that should be dedicated to an urban exploitation and may belong to the socimi’s portfolio for at least 3 years.
Why investing in a socimi?
In a socimi all of its shares are of one unique kind and nominative, giving to all of its holders the same level of economical and political rights. For the holders, tax advantages are the following:
- Socimis’ are free of tax for the Tax for Companies of Spanish Treasury, if when the foundation took place they chose to apply to the special tax regime anticipated in the law that give birth to the socimis in 2009.
- This societies have a bonus of 95% on the Tax on Patrimonial Transfers (ITP), if there are patrimonial profits when selling a real-estate asset.
- Socimis do even have a bonus of 95% on the Tax on Documented Legal Acts (AJD).
On the other hand, socimis are entitled to make the distribution of, at least, the 80% of the profits obtained by the rent of its real-estate assets, and of the 50% that proceeds from the selling of its assets (which must have been in their portfolio for at least 3 years).
Advantages for the socimi’s investors
The socimi’s investors do have an excellent level of correlation with the taxation of the assets obtained from it, this is because they are not liable to give an account of the taxes that those may generate; the shareholders do only receive benefits in correlation with the dividends shared.
When someone invests on a socimi what they are buying are the stocks that do correspond with a real estate-asset (whether it is an apartment, parking spot, offices, industrial, etc), but all the procedures of finding a tenant, keeping up with the maintenance, doing a follow-up of the payments and non-payments, etc, correspond to the socimi and the management company of the asset. The investor receives only benefits and does not have to bother with the inconvenient that may be investing on a real-estate asset in the “traditional” way.
Why did the socimis arise in Spain?
Socimis’ are companies mainly dedicated to buying and rehabilitating real-estate assets, which end-up being dedicated to a renting exploitation; that’s the way they promote the real-estate industry.
The boom of the socimis was between the years 2015 and 2016, dated when the real-estate market started giving retrieval signals, which made big companies to start investing on these kinds of societies.
Before the companies could get into the MAB to be listed, they are evaluated by an independent expert designated by the Merchant Record, and with a registered consultant that the socimis themselves do have to name before.