Real Estate Investment Trusts In Mexico -- Fideicomisos de Infraestructura y Bienes Raices (FIBRAs)
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Mexican legislators amended the Mexican Income Tax Law (MITL) -- articles 223 and 224 -- to allow Real Estate Investment Trusts in Mexico under the term FIBRA (Spanish acronym -- Fideicomisos de Infraestructura y Bienes Raices) in 2003, but implementation was delayed because of the tax consequences.
Mexican FIBRAs must be incorporated as real property trusts. They must have a trustee that is a financial institution domiciled in Mexico and authorized to act as trustee. Trusts are governed by the Mexican Law of Negotiable Instruments and Credit Operations.
Mexican FIBRA Legal Requirements
Mexican FIBRAs are similar to REITs in the United States, but there are differences. There is no minimum number of shareholders, and no restriction on how many shares any given individual can own. The Fibra's assets must consist of at least 70% real estate or related to real estate. The other 30% must be invested in Federal Government Securities registered in the National Securities Registry or in bond or money market mutual funds.
FIBRAs must distribute at least 95% of taxable income to shareholders no later than March 15 of the following year.
REITs in Mexico must hold their property for at least four years after date of construction completion or their aquisition of it.
FIBRAs can also be private offerings, as well as publicly listed and traded. Publicly listed FIBRAs must have at least 20% of shares owned by the general public and traded on the secondary market. These are Certificados Bursatiles Fiduciarios (CBFIs).
In 2010 the Finance Ministry helped clear the legal obstacles.
The First Real Estate Investment Trust in Mexico:
The first Real Estate Investment Trust in Mexico was listed March 2011, on The Mexican Stock Exchange (BOLSAA.MX).
Fibra UNO sold about $300 million in shares -- one third to foreign investors, two-thirds to local investors, including large pension funds. It plans to hold sixteen properties in Mexico. Some of the owners of the properties agreed to swap their real estate for shares of stock.
- Fibra UNO -- the first Real Estate Investment Trust in Mexico, listed in March 2011.
Hopefully there will soon be more Real Estate Investment Trusts in Mexico to invest in, so Fideicomisos de Infraestructura y Bienes Raices (FIBRAs) can provide lots of value to investors, and property owners.
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