Bulgaria Real Estate Investment Trusts - Special Purpose Investment companies (SPICs)
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The "Special Purpose Investment Companies Act" passed in 2003, creating pass-through entities -- meaning they are free of corporate taxes. However, they can be structured only as a special kind of joint stock company (AD).
This law became effective January 1, 2004. However, the first SPIC company did not get started until 2005.
Special Purpose Investment Companies -- SPICs -- are Subject to Bulgarian Law
The full legal name of the SPIC must include: "joint stock special purpose investment company" or the abbreviation "JSSPIC." The company's headquarters must be within Bulgaria.
However, SPICs are limited to purchasing real estate, constructing and improving property, managing property, renting or leasing property, and selling property. They may not invest in property outside of Bulgaria, or in property under legal dispute.
They may take out bank loans for up to 20% of a property's value - meaning they must come up with the other 80% in cash - and pay those loans back within one year. They may also invest up to 10% of their capital into mortgage bonds. No more than 10% of their assets may be invested in service companies.
The minimum capital is 500,000 BGN (255,646 euros), and has to be in the form of cash. A SPIC requires a license from the Bulgarian Financial Supervision Commission (FSC).
The Bulgarian Special Purpose Investment Company is exempt from income taxes per the Bulgarian Corporate Income Tax Act (CITA). Dividend distributions to nonresidents is subject to withholding taxes. There cannot be more than fifty founders. At least 90% of their net profits must be distributed to shareholders.
After the company is incorporated, at least 30% of its shares must be available on the Bulgarian Stock Exchange. And at least 30% of initial capital must be subscribed to by institutional investors.
After the IPO, they may raise money through selling equity or bonds.
REITs in Bulgaria can be either "closed" or "open." As of July 2010 there were nineteen SPICs listed on the Bulgarian Stock Exchange.
Bulgarian Real Estate Investment Trusts Include:
- Advance Terrafund REIT -- largest landowner in Bulgaria behind the government.
- Agricultural Land Opportunity Fund Mel Invest REIT -- acquires agricultural land or other parcels to renovate and lease them
- Agro Finance -- owns a lot of farmland.
- Agroenergy REIT -- strategy is to buy, then improve and rent out or resell property.
- Aktiv Properties REIT -- various commercial properties.
- Balkan and Sea Properties REIT -- owns car sale lots
- Bulgarian Investment Group REIT
- Bulland Investments REIT -- agricultural properties and some commercial real estate.
- CCB Real Estate Fund REIT (5CK)
- CEE Properties REIT (5CG)
- City Development REIT (CDX)
- Elarg Agricultural Land Opportunity Fund -- agricultural properties.
- Energetics And Energy Savings Fund REIT (6EE)
- ERG Capital 3 REIT-Sofia (5ER)
- Exclusive Property REIT - Sofia
- Expat Beta REIT -- commercial, office, vacation and residential properties.
- FairPlay Properties REIT -- commercial, office, vacation and residential properties.
- Forucom REIT-Haskovo (6F4)
- HypoCapital REIT (6H1)
- Intercapital Property Development Real Estate Investment Trust -- a summer resort and a winter sports resort.
- Park Inc (4PK)
- Premier Fund REIT (4PR)
- Real Estate Investments Fund - FINI REIT (RRH)
- Prime Property BG -- variety of commercial real estate projects.
- Sopharma Buildings REIT-Sofia (4OX)
- Sopharma Properties REIT (6S6)
- Status Properties REIT Sofia (6ST)
- Super Borovets Property Fund (6SB)
- Tourin Properties REIT-Sofia (TPS))
- Zenith Properties REIT-Sofia (Z3T))
- Bulgarian Real Estate Fund 5BU -- one of the oldest and largest REITs in Bulgaria.
- Benchmark Real Estate (6BMA)
- Health and Wellness REIT (4H8) -- building a string of resort spas.
- Invest Property REIT (5IP)
- Quantum Developments REIT PLC (5Q1)
- Real Estate Investments Fund - FINI REIT (RRH)
- Serdica Properties REIT (6SR)
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