10.01.2007

Residential real estate: cooperative as REIT alternative?

Now that the exclusion of residential REITs in Germany seems to have been determined, private investors, in particular, are starting to consider the alternatives. This is where the spotlight falls on a form of organisation which was never considered especially innovative: the cooperative. Modern residential cooperatives are not only in a position to offer their members fundamental elements of the REIT class, but are even able to include additional benefits for investors.

BY: ANGELA HAUPT

Four months ago in Germany, the cooperative was introduced in line with European legislation (registered cooperative - eG). This means that a cooperative can now incorporate, in addition to natural persons, legal persons and/or pure investors. Establishment via contributions in kind is also possible. In addition, members can transfer shares in business assets more easily, which provides for a certain fungibility of the shares. This is the first reform of the German cooperative system to take place for around 30 years and it is set to ease capital procurement and maintenance, as well as improving corporate governance. No changes were made to the strict policy regarding the promotion of membership interests.

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