What is a FIBRA?

 

A FIBRA is an investment trust dedicated to the acquisition and development of real estate in Mexico held for leasing. In accordance with Mexican law, a FIBRA must be established as a trust pursuant to a Mexican law-governed trust agreement.

Characteristics of a FIBRA

FIBRAs are regulated under Articles 187 and 188 of Mexican Federal Income Tax Law, and are required to comply with the following:

  • the main purpose of the FIBRA trust must be the acquisition or construction of real estate properties in Mexico destined for lease or the acquisition of the right to obtain income from the lease of such real estate properties, as well as to grant financing for such purposes secured by the respective leased real estate properties;
  • at least 70% of the trust estate of the FIBRA must be invested in real estate properties in Mexico destined for lease, or the right to obtain income from the lease of such real estate properties, or financings granted for such purposes secured by the respective leased real estate properties, and the remainder of such trust estate must be invested in securities issued by the Mexican federal government and registered in the Mexican National Securities Registry or in shares issued by mutual funds (sociedades de inversion en instrumentos de deuda)
  • the properties constructed or acquired by the FIBRA must be destined for lease and may not be sold within a period of four years following the date of construction completion or acquisition thereof, as applicable;
  • the FIBRA must distribute to its real estate trust certificates (CBFI) holders, at least once a year and no later than March 15 of each year, at least 95% of the net tax result (resultado fiscal) accrued during the immediately preceding fiscal year; provided that, if the net tax result during any fiscal year is greater than the distributions made to CBFI holders during the twelve months ended March 15 of the following fiscal year, the FIBRA will be required to pay the applicable income tax for such difference at a rate of 30%, on behalf of and without identifying the holders of the certificates but such taxes paid by the FIBRA may be credited by the holders of certificates to the extent the relevant holder is a taxable person; and
  • the trustee of a FIBRA must issue certificates (certificados de participaci√≥n) to represent the trust estate, and such certificates must be publicly offered.