Real Estate Investment Trusts in Puerto Rico

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The law authorizing Real Estate Investment Trusts in Puerto Rico -- P.R. Internal Revenue Code as amended 1994. PRIRC 1500 to 1502 and 1101(18) -- was enacted in 1972 and amended in 2000 and 2006.

I assume that Puerto Rico was relatively early in this regard because it's connected to the United States, where the REIT law was passed in 160.

Real Estate Investment Trusts in Puerto Rico Legal Requirements

They must have at least fifty shareholders or partners. At least fifty percent of the total value of outstanding shares must be owned by more than five people. They cannot be a financial institution or a life insurance company subject to taxation under Subchapter G of the PR IRC.

95% or more of their gross income must come from dividends; interest; rents from real property; gain from the sale of real property; and payments received for executing loans guaranteed with mortgages on real property, or acquire or lease real property.

75% or more of gross income must come from rents from real property located in Puerto Rico; interest on obligations secured by mortgaged on real property or rights to real property located in Puerto Rico; gain from the sale of real property; dividends from stock in another REIT; amounts received for entering into agreements to make loans secured by mortgages on real property, and to buy or lease real property in Puerto Rico.

At least 75% of the total assets is represented by real estate assets, cash or equivalents, and securities and obligations of Puerto Rico.

At least 90% of their income must be distributed to shareholders annually. The REIT before amendation in 2006 was very restrictive, so not many REITs were formed.

Being a Real Estate Investment Trust in Puerto Rico is a Tax Matter

REIT status is primarily a tax matter, so qualifying depends on a company declaring its status. They can be corporations, partnerships, trusts or associations. The Commissioner of Financial Institutions regulates Real Estate Investment Trusts in Puerto Rico.

REITs in Puerto Rico may be listed or private. According to one source, the first listed REIT began in 2008. However, I have not been able to find it.

Puerto Rico is not really a country - it's a territory of the United States, so companies based there can be listed on the New York Stock Exchange. It doesn't have its own exchange.

I found a list of sixteen Real Estate Investment Trusts in Puerto Rico, but they're all private companies. That is, they're not listed on a public stock exchange.

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