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Tuesday, 12 July 2011 09:01

Real Estate Investment Trusts in Chile come from law on Investment Funds published in the Official Gazette on 29th July 1989 (as amended). They are known under the Spanish name Fondos de Inversion Inmobiliario (Real Estate Investment Fund) or FII. A Chilean FII may be public or private. When public, it must be managed by a corporation, “Sociedad Anonima” registered in Chile. The Chilean Securities Commission - Superintencia de Valores y Seguros - SVS - must approve the FII rules. There is no legal requirement as to initial capital, but within a year of formation it's supposed to have at least an amount of the equivalent of about USD$350,000. Private Fondos de Inversion Inmobiliario in Chile must have under 50 shareholders, whereas listed FIIs must have at least 50 shareholders within 6 months or at least one institutional investors. A FII cannot hold investments in another FII managed by the same entity. Liabilities may not exceed 50% of assets. At least (“only”) 30% of the FII in Chile's income must be distributed to their shareholders 30 days after the annual meeting. This is extremely low since the usual amount is 90%. There is no provision under Chilean law for a real estate company to convert to REIT status.