Collective Investment Undertakings can be lessees in real estate financial leasings21 March, 2019
Until now, the question whether Real Estate Investment Undertaking (Organismos de Investimento Imobiliário – “OII”) may or not compose their portfolio of assets with real estate properties of which they are lessees (under a real estate financial leasing) was very divisible.
This was because Article 204/2 of the Legal Regime for Collective Investment Undertakings (approved in the annex to Law 16/2015, of 24 February) provides that the assets of an OII can be composed of urban buildings or urban autonomous units held by the OII through property rights, surface rights or other rights with equivalent content (our emphasis).
Through the Circular issued on 14 March, CMVM clarifies that the portfolios of assets of the OII can be composed by real estate properties for which they have assumed the position of lessees under a contract real estate financial leasing.
Nevertheless, due to the specificities arising from the Legal Regime of Collective Investment Undertakings, CMVM recommends that OII shall ensure (in the financial leasing agreement) the possibility of exploitation (e.g., through lease) of the real estate that are subject of those contracts. According to the CMVM, the financial leasing agreement should also provide that the lessee position of the OII can be transmitted.
The circular also establishes the rules that must be observed regarding the accounting treatment of real estate financial leasing agreements in which the lessee is a OII. Thus, the conclusion of the contract affects the asset (account 31 or account 32), against the liability (account 42). Rents affect costs in the interest component (account 71) and liabilities in the capital amortization component (account 42). At the end of the contract, the residual value is registered in account 42, the value of the liability account being settled against the cash equivalents, if the residual value is paid in order to acquire the property right.
Nuno Nogueira Pinto