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Wednesday, 13 July 2011 03:59

The law authorizing Real Estate Investment Trusts in Puerto Rico was enacted in 1972 and amended in 2000 and 2006. Real Estate Investment Trusts in Puerto Rico must have at least 50 shareholders or partners. At least 50% 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, and some 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. At least 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 laws before 2006 were very restrictive, so not many REITs were formed. 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.

Last Updated on Wednesday, 13 July 2011 04:16