Mexican trusts, where the individual investor or a corporation transfers financial resources to the trust and then the trust itself acquires the real estate and holds title thereof. Thus, it can be created to indirectly acquire the property, whereby the real estate is settled in trust, since no real estate rights would be owned by the trust beneficiaries, only trust rights. The maximum duration of such trust is 50 years, subject to renewal; provided further that, in such cases it is required to obtain a permit from the SRE in order for such trust to own the relevant real estate property in the Restricted Zone. As of today, there have been no amendments to the relevant laws in order to delete this foreign investment restriction on real estate. There are great benefits and advantages of holding real estate property through a Mexican trust, for example, the trustee shall be responsible for the administrative work and for the conservation and protection of the trust assets — subject to an annual fee to the bank — , the investor’s heirs can inherit the rights to the trust and some tax advantages, among others. (c) Real Estate Investment Trusts In recent years, Real Estate Investment Trusts ( Fideicomiso de Inversión en Bienes Raíces ) (“ FIBRAs ”) have also become important investment vehicles for foreigners who seek to invest their capital in Mexico. They are a specific type of trust designed for the real estate business and are regulated by, among others: (i) the LGTOC; (ii) the Mexican Securities Law ( Ley del Mercado de Valores ) (“ LMV ”);

and (iii) the Mexican Income Tax Law ( Ley del Impuesto sobre la Renta ) (“ LISR ”). The Mexican Congress, in order to make more attractive the investment of capital in the real estate market in Mexico, included in the LISR special tax benefits for FIBRAs. According to the LISR, in order for a trust to be considered a FIBRA and to have the tax benefits provided by the LISR, it needs to comply, among others, with the following requirements: (i) to be executed pursuant to Mexican laws and with a Mexican trustee. (ii) to have as its main purpose the acquisition or construction of real estates in Mexico that may be destined for lease, or the right to obtain income from the real estate. (iii) that the real estate contracted or acquired by the FIBRA be destined to lease (or equivalent) and not be sold within a period of 4 years following the date the construction of the real estate was completed or as of the date of the acquisition of the real estate, as applicable. (iv) that the trustee of the FIBRA issues

trust certificates to represent the assets allocated in the FIBRA so that such certificates may be placed through a public offering in the Mexican Stock Exchange and registered before the National Securities and Intermediaries Registry ( Registro Nacional de Valores ); and that the trustee of the FIBRA distributes to the holders of the relevant trust certificates issued through the public offer, at least


ILN Real Estate Group – Buying and Selling Real Estate Series

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