Flowers in bloom, birds chirping and second-quarter results are perennial reminders of summer. In 2007, summer also started with the enactment in June of German REIT legislation, was passed by Germany’s parliament in the spring. The legislation was retroactive to Jan. 1, 2007.

“This is very positive for the European real estate market,” says Fraser Hughes, research director with the European Public Real Estate Association. “All of the major economies have REITs, or are soon adopting it, as in Italy’s case.”

The newly minted G-REIT has many characteristics of its U.S. REIT predecessor. Legislation specifies that 75 percent of a G-REIT’s income must come from real estate, and 90 percent of a REIT’s taxable income must be distributed to shareholders as dividends.

Dr. Hans Volkert Volckens, a partner with German law firm Beiten Burkhardt, says Germany’s Ministry of Finance is still clarifying certain legal and tax issues within the current REIT legislation and expects appropriate solutions by year’s end.

Volckens adds that there is generally a great deal of optimism surrounding G-REITs’ potential impact on the real estate market. “Germany has opened the possibility to attract foreign investors by providing a platform for indirect real estate investments that is very similar to REIT platforms in other countries and meets the requirements of global investors.”

“The underlying real estate market in Germany is the largest one in Europe, but there is a very small percentage of listed real estate on the German stock exchange,” Hughes says. “The German REIT structure will hopefully offset this and provide real estate exposure to a broader range of investors.”

NAREIT’s President and CEO Steven A. Wechsler also calls the G-REIT a positive step for the German property market. “The G-REIT legislation brings Germany into the growing international REIT family, and it better positions Germany to attract the widening range of investors seeking diversification globally.”