REITs (Real Estate Investment Trusts) Have Arrived in Mexico, Or FIBRAs

REITs (Real Estate Investment Trusts) Have Arrived in Mexico, Or FIBRAs

 

Definition: A Real Estate Investment Trust is a corporation or trust that uses the pooled capital of many investors to purchase and manage income property (equity REIT) and/or mortgage loans (mortgage REIT). REITs are traded on major exchanges just like stocks. They are also granted special tax considerations. REITs offer several benefits over actually owning properties. First, they are highly liquid, unlike traditional real estate. Second, REITs enable sharing in non-residential properties as well, such as hotels, malls, and other commercial or industrial properties. Third, there's no minimum investment with REITs. REITs do not necessarily increase and decrease in value along with the broader market. However, they pay yields in the form of dividends no matter how the shares perform. REITs can be valued based upon fundamental measures, similar to the valuation of stocks, but different numbers tend to be important for REITs than for stocks

A FIBRA (Fondo de Investion de Bienes Raices o Fideicomiso de Infraestructura y Bienes Raices) is the name REITs have taken in Mexico and Latin America, though it has taken a while for FIBRAs to be developed into appropriate models of real estate investment to reflect the benefits that a REIT may provide to Mexican Real Estate Investors similar to those provided by REITs in the USA. 

FIBRAs first appeared in Mexico in the year 2004 with the REFORMA FISCAL (FISCAL REFORM) took place in Mexico.  However, it has not been until recent years that the modifications to the LISR (Ley Impuesto Sobre la Renta) or the Tax Law Reform for the application of a FIBRA has been done to provide for a FIBRA to become an important and attractive vehicle for real estate investment in Mexico.

There are at present time a small number of FIBRAS for it is a concept that has not taken yet being fully understood, nor fully taken advantage of by real estate investors in Mexico, whom still utilize more traditional investment funding sources as real estate investment vehicles.

However, with the changes on the Ley del Impuesto Sobre la Renta, more particularle Articles 223 and 224, an increase in these forms of real estate investments is foreseen in the immediate future.

For while there are about 180 REIT’s with an equivalent approximate of $400,000 Million USD in real estate investment in the USA, FIBRA’s in Mexico are still far below and between those numbers yet.

Benefits of a FIBRA:

-          Tax Incentives

-          Guaranteed Returns

-          Professional Administration

-          Minimum Investment

-          Third Party Supervision

-          Transaction’s Transparency

-          Liquidity

-          Yearly Dividends

-          Certificate’s Appreciation Value

-          Establishing an Investment Portfolio

These among other important aspects of benefits and guarantees are what makes investment in FIBRA’s one of the most productive and safe investments in Real Estate in Mexico.

Thus and being that Mexico Realty Solutions’ main operations are based in Playa del Carmen and the Riviera Maya, one of greatest growing sectors in real estate investment in Mexico and the Caribbean, is now offering the opportunity to Mexican National and Foreign National Investors to enter the new trend in Real Estate Investment in Mexico, an Investment in a FIBRA, a Real Estate Trust.

If you are interested in finding out a little more regarding this real estate investment vehicle in Mexico, feel free to contact us.