Immobilien AG: activities, stock exchange, conditions & advantages

A real estate stock corporation – or real estate AG for short – is a real estate company that has the legal form of a regular stock corporation (AG) and whose core business is primarily focused on the real estate sector. The company’s assets are thus used primarily – or exclusively – for real estate investments, or they consist of the construction of real estate and the subsequent sale of the same.

The largest German listed companies for residential real estate (as of 31.12.2o19):

• Vonovia
• German Housing
• LEG
• DAY
• Grand City Properties
• Adler Real Estate
• GAG

Business Activities Real Estate AG – Construction, Trading, Management & Co.

The range of activities of real estate stock corporations focuses, for example, on project development and the construction of real estate. The management and sale of real estate are also not uncommon focal points of this type of company. All in all, public limited companies can be involved in real estate trading, the brokerage of real estate as well as the holding and management of their own portfolios or offer corresponding services for non-corporate investment portfolios. Real estate stock corporations are a particularly popular choice for leasing.

Possible activities at a glance:

• Project development
  • Building
• Real Estate Trading
  • Acquisition
  • Distribution
• Real estate management
  • Hold
  • Farm
  • Rent
• Third-party services
  • Brokerage of real estate not owned by the company

Real estate company on the stock exchange – legal requirements & advantages

Real estate stock corporations can choose whether or not they want to be listed on the stock exchange. If you are a shareholder of a real estate stock corporation and decide to list your company on the stock exchange, you are subject to the German Real Estate Investment Trust Act (REIT Act). The REIT Act specifies which general regulations apply to your company and which qualifications your company must have in order to be admitted as a REIT stock corporation, as well as which tax regulations must be taken into account.

Many family businesses wishing to operate in the real estate sector as a public limited company (AG) deliberately decide against such a stock exchange listing, as the shareholders of their company are to be restricted to their own family circle of contacts and no share trading in public is envisaged.

Exchange-traded real estate stock corporation / REIT-AG

The REIT corporation is originally based on a US corporate form, namely the “Real Estate Investment Trust” – REIT for short – which gave the listed real estate corporation its name. Since its beginnings, the trust has experienced a considerable upswing. Little known in 1960, the corporate legal form slowly but steadily conquered the world in the 1990s and gained international renown. With the enactment of the REIT Act in 2007, the legal form of the REIT-AG was also introduced in Germany.

To make it easier to distinguish between them, German REITs are also often referred to as G-REITs, with the “G” standing for “Germany”. Sometimes REITs are also incorrectly translated as real estate funds in this country – however, there are some legal and economic peculiarities compared to the German legal form of the real estate fund.

Legal requirements according to REITG – stock exchange listing, quota & Co

In order for real estate stock corporations to be recognized as REIT corporations and to enjoy the corresponding advantages and benefits, they must meet a number of requirements defined in the German Real Estate Stock Corporations with Listed Shares Act (REITG). One of these rules requires that the real estate stock corporation be mandatorily listed on the stock exchange. Other restrictions relate to the company’s permitted free float – i.e. all company shares distributed among several, smaller investors – as well as the participation by shareholders together with per capita distribution of the shares. Other conditions regulate the equity capital, the fixed assets and also the turnover generated by the management of real estate.

Legal requirements for a REIT-AG:

• Headquarters & Management within Germany
• Listing on the market obligatory
• Free float at the time of listing: at least 25%.
• Free float after listing: at least 15%.
• Equity ratio: at least 45
• Real estate investments (immovable assets): at least 75%.
• Income from real estate: at least 75
• REIT participation per shareholder: max. 10%.
• Distribution ratio (net profit): at least 90%.

Small tip: For real estate stock corporations shortly before listing, a time window of two years is granted in order to fulfil all necessary requirements. Until all requirements under the REITG have been fulfilled, such a company is considered a pre-REIT.

Advantages for REIT stock corporations – tax exemption, competitive advantage & Co.

Real estate stock corporations with a stock exchange listing are particularly popular for financiers and large investors, as they are exempt from both corporation tax and trade tax, provided they meet the legal requirements in accordance with the REITG. As real estate is a particularly safe investment opportunity, it offers the chance to cushion inflationary fluctuations and risks. Furthermore, the purchase and sale of shares is simple thanks to market access, and transfers of ownership can be carried out quickly and flexibly.

Access to the capital market enables a real estate stock corporation to skilfully generate equity capital, which can then finance the investment in real estate. As a result, real estate stock corporations have a clear advantage in terms of the speed of growth of their equity, which means greater competitiveness in the market as a whole. Other legal forms of companies, on the other hand, are dependent on retaining their profits – that is, leaving the profits in the company instead of distributing them and accumulating them there – in order to increase their company’s equity capital or have no legal claim to a distribution of profits. The legal form also offers a considerable degree of security, as the equity capital accounts for just under half of the stock corporation’s total capital.

Advantages for listed real estate companies:

• No corporate income tax
• No trade tax
• Secure investment through tangible assets (real estate)
• Chance to offset inflation
• Quick & easy purchase/sale of shares
• Flexible share transfer
• Simple equity procurement
• Competitive advantage due to high growth rate
• High security due to equity ratio

Advantages for investors – Stable cash flow, growth & 90 % dividend

Another plus: the REIT corporation also offers a lucrative business for investors. Public limited companies are generally established for the long term, which means that the company can offer investors the prospect of a stable cash flow and long-term growth without exposing them to increased risk. The dividend payout is also very attractive for shareholders, with a statutory minimum requirement of 90 percent of the net profit for the year under commercial law.

Advantages for real estate AG investors:

• Stable cash flow
• Long-term corporate growth
• Low risk
• Attractive dividend payout

However, the application of the half-income method is not possible for shareholders with regard to the distribution of profits. Their profits must be fully taxed.

Real estate stock corporation / REIT-AG – For whom is it worthwhile?

Are you thinking about founding a real estate company or investing in an existing real estate company? For construction companies and development companies, this is often a lucrative venture, but also as a financier or shareholder of a real estate holding company, the formation of a real estate corporation can be quite worthwhile. Furthermore, the economic occurrence of real estate stock corporations extends to housing associations, property management companies and large brokerage firms.

Ownership of the real estate portfolio may be held either by the real estate company itself as a direct investment or by another real estate company whose shares are acquired by the real estate company by means of a participation. A mixture of direct investments and third-party investments is often used to acquire, hold or sell real estate. Due to the wide range of residential and commercial properties, the stock exchange listing is an attractive model for real estate companies.

AG: foundation, legal form, real estate shares (list)

1. Stock corporation (AG)
2. Real estate shares: List of companies
3. Real estate company
4. Alternatives to the REIT: Legal forms in Germany

Stock corporation (AG): Formation, liability, legal form & Co.

Aktiengesellschaft (AG) – The stock corporation is a German legal form founded by at least one person and organized by different bodies. Instead of a managing director, the company is managed by a board of directors consisting of at least one person. As the name already indicates, this legal form of a company primarily stands for stock trading. You would like to start a company alone or together with other people and learn more about company law forms in advance? Then you’ve come to the right place!

• Stock corporation (AG)

Real estate shares: List of companies

Real Estate Shares – Not everyone can afford real estate as a capital investment. Through real estate shares, however, everyone can participate in the real estate market and invest money. The share prices of the big players are rising year after year. Vonovia, Deutsche Wohnen, Dream Global, CBRE and Patrizia are a few of the best known active companies in Germany. In addition, there are more than 25 other companies. We have an overview of the most popular real estate stocks for you as an investor. But first a look at the risks of a stock, the stock market, for beginners and beginners. Now to the list and more on the real estate market, your investment options and all prices at a glance, here in the article on real estate stocks.

• Real Estate Stocks

Real Estate GmbH & Asset Management GmbH

Alternative – In this article you will learn the basics about real estate companies. Briefly explained, a real estate company is a company that has the purpose of leasing, developing, financing, realizing and/or marketing. It doesn’t matter if it is one or more properties. The management of residential and commercial real estate – in its own interest or as a service offered to third parties – is also a popular focus for real estate companies and asset management GmbHs. Find out more about the main advantages and disadvantages of buying real estate and the expected costs.

• Real estate company

Alternatives to the REIT: Legal forms in Germany

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• Entrepreneurial company (UG)
• GmbH: Limited liability company
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Societas Europaea (SE)
• Foundation / Family Foundation

USP and unique selling point of your business idea

In addition, you need to make statements about your development status. Whether it is software or a physical product that has to be produced in the Far East, for example. The development from the first concept over the design up to the finished product costs time and money. That is why the conditions are also important, what has already been created and what conditions still have to be fulfilled before it can start? From the trademark application to the patent, depending on the product, the preparation is very different. Let’s go into business! Product creation:

1. What is special about your offer?
2. Start of production/service?
3. State of development of your product/performance?
4. What requirements must be met before starting?
5. When can the product be marketed?
6. What legal formalities (e.g. approvals, etc.) have to be completed?

What is special about your offer?

The USP is special. With the USP you express the uniqueness, the special, the added value of the product, which will ultimately convince customers to change from competing products or access the product for the first time. The USP must always be brief. Ideally, you manage to limit the benefits of your product or service to three key points.

State of development of your product / service?

The stage of development of the project is extremely important, depending on its complexity. From one experience, there are even certain industries in which you have to demonstrate your work in advance extremely many qualifications. This includes one or the other training, as well as proofs by authorities and offices as well as certificates of good conduct but also certain structural changes.

The production continues. Those who can do everything themselves have a clear advantage, of course. E.g. your own online shop, independent setup, adding new payment providers, checking interfaces, search engine optimization and design. In this case you can of course make a lot of statements about the development status of the business idea or product.

As a rule, however, most founders are dependent on external service providers. Whether this is the advertising agency, for the online shop, the producer for the first prototypes for sale or also the developer for the software project. Accordingly, the status must be noted in the business plan and also permanently updated. Where are you at and where are the risks?

Also here briefly own experience by acquaintances: For example, if you have an app developed and the agency dissolves after two years, who will continue working on the project? And much better, who thinks of such a question in advance? Suddenly you’re looking for a new development team. Have a good time. Developers are even more difficult to get than craftsmen, that’s for sure. Accordingly, at the stage of development, you need to focus not only on where you are and what steps are next, but also on how you consider possible risks that may arise in months or years.

When can the product be marketed?

With the marketing begins of course also the attention and publicity. As soon as a product is on the market, competitors will know about it and of course people who are not yet competitors will also know about it.

Accordingly, the leek of a product must be precisely planned. Not only because of competition and potential new competition, but also because of completion. Nothing is worse than a big start announced by the media and as soon as the day is reached, thousands of people visit your website, you have to apologize that you are still in development. Fatal. At the same time you have to make sure that your product is not finished and that you need three or four months until you can go to market, e.g. because your online shop is not finished, the logo, the brochures and the product packaging. Of course, you must also mention the most important parameters in the business plan, because bankers and investors will ask exactly these questions.

Mark protection and evaluation

When do you have to protect a trademark or an idea? Ideally from the first, public minute. A classic example here is the zipper. Market entry without patent. To this day, anyone can make zippers without the inventor ever having received a cent. Another very example is the term “Ballermann”. More and more Germans travelled with the economic miracle of the 70s. The first big holiday waves began and the Germans discovered Mallorca for themselves. Few flying hours, fantastic weather and fantastic beaches. In the middle of the idyll lies the “Ballermann”. No one had ever had the name “Ballermann” protected. Until André Engelhardt and his wife Annette came up with the idea. They took advantage of the lack of trademark protection and applied for a patent on the name. Since then, the couple have been earning money with every single release that bears their name, whether it’s a CD or a T-shirt. Brilliant. That shouldn’t happen to you, but with your badge. Therefore five more central questions for you about patenting and trademark protection:

1. What development steps are still necessary for your product?
2. Who is performing the test?
3. When will the possible patenting procedure be completed?
4. Which technical / dermatological / … Approvals are required?
5. Rights: Which patent or utility model protection rights

Guideline: Setting up your own business & business plan

You want to start your own business as a real estate agent or with another business idea? We support you with tips on your business plan and concept. Whether self-employed full-time or part-time self-employed: If you want to set up your own company, you have to think about a lot, in advance and in the operative business. From the right idea to health insurance – what needs to be considered if you want to become self-employed?

There is no training or further education for entrepreneurs. Managing director is you or not. Your own ambition is always important, because this is the only way to improve, every day.

The topics at a glance: