1. New rules concerning SIIC 1.Currently CABINET SEVESTRE-MARCEAU AVOCATS y.sevestre@cabinet-sevestre.com  Sociétés d’investissement immobiliers cotées (SIIC) :  Quoted company;  Minimal share capital 15 M€.  Special tax exemption:  Tax Exemption concerning the renting profits (if 85% or more of profits are distributed to the stockholders);  Tax exemption of the capital-gain derived from the cession of real property (if 50% or more of the capital gain are distributed to the stockholders);  Tax exemption of the dividends from another SIIC (if 100% of the dividends are reallocated to the stockholders).

2. New rules concerning SIIC 2.1 Restrictions concerning the number of shareholders CABINET SEVESTRE-MARCEAU AVOCATS y.sevestre@cabinet-sevestre.com  Aim of the reform: to avoid SIIC with only few shareholders  New conditions :  Share capital detention : one (or more) shareholder (if acting together) can not own more the 60% of the share capital of the company  Sanction : end of the corporate tax exemption/ taxation at the rate of corporate income tax  Will be in Force 2007 fiscal year (option for the SIIC tax regim is made after the first of January 2007) 2009 fiscal year (option before the first of January 2007)

3. New rules concerning the SIIC 2.1 Restrictions concerning the number of shareholders CABINET SEVESTRE-MARCEAU AVOCATS y.sevestre@cabinet-sevestre.com  Capital share detention when the option is made : When the option is made, 15% of the capital of the company must be hold by stockholders with less than 2% of the capital share. This condition applies since the 2007 fiscal year

4. New rule concerning SIIC 2.2. Restrictions concerning the quality of shareholders: NEW 20 % withholding tax CABINET SEVESTRE-MARCEAU AVOCATS y.sevestre@cabinet-sevestre.com  A 20% Withholding tax is established in order to collect tax when distributions of dividends are made to shareholders who are not subject to taxation  The Withholding tax applies to:  Shareholders who own (directly or indirectly) more than 10% of the capital of the SIIC (when the dividends are paid);  Shareholders who are not subject to corporate income tax (exoneration) or (if not subject to income tax in France) are subject to income tax at a rate inferior to 2/3 of the French income tax.  The Withholding tax can not be entered as a charge of the company  Applies : Distribution of dividends paid after the1 st July 2007.

5. New rule concerning SIIC 2.2. Restrictions concerning the quality of shareholders: NEW 20 % withholding tax CABINET SEVESTRE-MARCEAU AVOCATS y.sevestre@cabinet-sevestre.com  Is this Withholding tax compatible with the tax treaties?  The 20% withholding tax does not apply if the beneficiary of the dividends is obliged to reallocate all the dividends to its shareholders (more than 10% of the shareholders must be subject to corporate income tax or to an “equivalent” taxation) )  Does this Withholding tax apply in case of distribution to a REIT from another State?

6. New rules concerning the SIIC 2.3. relaxations of requirements CABINET SEVESTRE-MARCEAU AVOCATS y.sevestre@cabinet-sevestre.com  The SIIC tax system applies to the usufruct of real property, the property derived from a long lease agreement (bail emphytéotique) or a ground lease ( bail à construction)  Neutrality of sales/contributions within the same group of SIIC :  Capital gain derived from the sale/contribution between a SIIC and subsidiaries or between subsidiaries of a SIIC are not subject corporate income tax the fiscal year of the sale/contribution.  The SIIC can make an option for the suspension of the taxation (as in the merger taxing status)  Exemption of dividends granted by another SIIC  No need to be granted by a subsidiary.  The exemption applies in case of 5 % capital detention.

7. New rules concerning SIIC 2.3. relaxations of requirements CABINET SEVESTRE-MARCEAU AVOCATS y.sevestre@cabinet-sevestre.com  The SIIC tax system applies to joint-ventures  A company 95% hold by one or more SIIC can opt for the SIIC tax system  The SIIC tax system applies in case of acquisition by a SIIC of 95% of capital of another SIIC.  The company becomes a subsidiary since the fiscal year of acquisition  Two conditions are required by the law: The company must fulfill the distribution of dividends obligations The company must stay a subsidiary for at least 10 year NB :these rules apply as from January 2007

8. New rules concerning SIIC 2.3. relaxations of requirements : acquisition of hotels and restaurants CABINET SEVESTRE-MARCEAU AVOCATS y.sevestre@cabinet-sevestre.com  In case of acquisition of an Hotel or a restaurant, the SIIC has not to distribute 85% of the benefits from the renting profits but 50%.  This rule applies if the real property is sold by the restaurant/Hotel and if there is a lease agreement between the SIIC and the Hotel/restaurant for at least 9 years.  This rule applies until 31th December 2009

9. New rules concerning the SIIC 2.4. Capital gain in case of Sale of real property to a SIIC CABINET SEVESTRE-MARCEAU AVOCATS y.sevestre@cabinet-sevestre.com  currently : The capital gain derived from the cession of a real property or leasing estate are taxed at the rate of 16,5% (+ social contribution) if:  The real property is bought by a SIIC ;  5 years holding of property commitment required ;

10. New rules concerning SIIC 2.4. Capital gain in case of sale of a real property to a SIIC CABINET SEVESTRE-MARCEAU AVOCATS y.sevestre@cabinet-sevestre.com  New adaptations :  Apply until the 31th December 2009.  Apply to the cession of usufruct, ground lease agreement, long lease agreement  This taxing status applies to the acquisition made by the subsidiaries of a SIIC or by a SPPICAV (new real property company) if these company are within the SIIC tax system for more than 5 years.