Real Estate Investment Companies

A Real Estate Investment Company is any legal entity, trust or contractual arrangement constituted under the laws of the Republic of Panama, which through the issuance and sale of its participation quotas, engages in the business of obtaining money from investors, through single or periodic payments, with the purpose of investing and negotiating, either directly or through subsidiaries, in real estate, titles representing property rights or in the real estate development and administration business in the Republic of Panama.


  • Obligation to Register.
  • Have an informative prospectus.
  • REIT must invest 80% of its assets in real estate located in Panama.
  • REIT must comply with the investment policies established by the Superintendence of the Securities Market (“SMV”).
  • Have an Investment Administrator or be self-managed.
  • Minimum total capital required or initial trust equity of B /. 50,000.00.
  • REIT must distribute 90% of its net profit in the fiscal period.
  • Tax Incentives:
  • Payment of 10% on profit of the shareholders.
  • Not subject to Income Tax.
  • Real estate is not subject to the payment of Capital Gain Tax.
  • The REIT must have a minimum of 5 investors within its first year, 25 investors in the second year, and 50 investors in the third year.

Registration Request.

We highlight some of the requirements that promoters or persons interested in registering a REIT must submit to the Superintendency of the Securities Market:

  • Request through a lawyer registred in the Republic of Panama;
  • Name or company name of the applicant and information on the incorporation of the company and registration in the Public Registry, if applicable;
  • The domicile of the applicant, and the business address of the entity in case it differs from the legal one;
  • Appointment of the Investment Administrator;
  • Appointment of the custodian of the REIT;
  • Identification of the type of fund involved;
  • Authorized Stock Capital of the company and minimum total equity with which the operation of the company will begin. In the case of trusts, you must declare the initial trust assets;
  • Informative Prospectus;
  • Amount of participation quotas whose registration is requested for public offering and initial offering value.

Documents that must be submitted with the Request:

The application for registration of an investment company must be accompanied by the following documentation:

  1. Authentic copy of the Public Deed
  2. Public Registry Certificate
  3. Simple copy of the personal identity card of the directors and dignitaries of the applicant
  4. Audited financial statements corresponding to the last fiscal year, in the case of a legal person already constituted and in operation previously, and in another case, an initial balance of operations of the trust, audited by an independent auditor.
  5. Resume of directors and dignitaries, legal representative, and persons who appear in the contract with powers of administration of the assets of the Investment Company.
  6. Informative Prospectus of the Investment Company.
  7. Copy of the signed contract, if applicable, with the Investment Administrator and a copy of the signed contract with the Custodian.
  8. Copy of the commercialization contracts that have been signed, where appropriate, with Banks and Brokerage Houses that, in accordance with their Business Plan, can perform such functions.
  9. Draft Code of Conduct.
  10. Advertisements and other advertising materials that the Investment Company intends to use, including the Public Offering Notice.
  11. In the event that the services of a foreign entity are to be contracted for the sub-management of part or all of the fund’s portfolio, a draft of the contract to be signed.
  12. Model of the investment contract to be signed between each investor in the fund and the investment administrator company. The SMV may establish a minimum content for this contract or guidelines to which the management companies must abide in its preparation.
  13. In the event that they are going to use sales agents, information on the human and technical resources available to them to provide such service; as well as the draft of the corresponding contracts.
  14. In the case of funds that represent their shares by means of macro-title, draft of the contract that will be signed with the Central Stock Repository.
  15. Draft minutes that reflect the terms and conditions related to the operation of the investment company, issued by its Board of Directors or management body that contains at least the following parameters:
  • Name of the investment company; o Term of duration;
  • Policy on investment of resources, detailing at least the types of assets in which they will be invested, the diversification policy of the fund’s investments, the treatment of excess investment and its liquidity policy;
  • Profit sharing policy; o Administration commission;
  • Operating expenses that can be attributed to the fund;
  • Rules regarding mandatory information to be provided to participants;
  • Policy on capital increases, and in the event that voluntary and partial capital decreases are contemplated, in accordance with the regulations of this law, the terms, conditions and deadlines to carry them into effect;
  • Debt policy; o Return of capital policy; o Matters that will correspond to the knowledge of the extraordinary assembly of the participants; o It is understood that several Investment Companies that wish to operate jointly under the concept of “family” or “group” of Investment Companies, may register with the SMV simultaneously and by means of a joint application to which it will be attached the indicated documentation.


In the case of investment companies constituted as trusts, all the requirements established in this agreement for their registration shall apply, as applicable.

In the case of documents issued abroad, they must be presented with an apostille or comply with the corresponding consular procedures.

Informative Prospectus.

The Informative Prospectus of a Real Estate Investment Company must reflect the following:

  • Company name and commercial name of the Real Estate Investment Company.
  • Investment objectives and policies: o Investment selection criteria, referring to maturity dates. o Sector strategy and concentration percentages in each sector. o Geographical distribution of investments. o Types of real estate. o Real estate development and management business investments. o Inherent risks of investments. o Risk diversification criteria. o Investment program and calendar. o Policies for the conservation and insurance of real estate. o Debt policies.
    • Existence of liquidity coefficient.
  • Subscription mechanism, and redemption, if applicable, of the participation quotas, how to calculate the net value per participation quotas. In the case of redemption, the applicable rules must be indicated according to the nature of the investment company. Likewise, if the investment company distributes profits, the applicable procedures must be indicated.
  • Minimum amount of the investment.
  • Commissions of administration, of commercialization of the quotas, and others that are fixed.
  • Dividend and distribution policy.
  • Designation and identification of the investment administrator. In the event that the Investment Company is going to carry out its administration itself, a description of the administration bodies (investment and audit committees, among others), structure and organizational chart of the entity.
  • Designation and complete information on the person who will act as custodian of the securities in the portfolio of the Investment Company.
  • Rules applicable to the removal and replacement of the Investment Administrator and the Custodian.
  • Minimum total capital or initial trust equity to be maintained by the Investment Company.
  • Method by which your investments will be valued.
  • Designation of complete information on the evaluating entities that will value the Allowed Investments; as well as a review of his career in the local real estate market.
  • In the event that it is contemplated to use the services of Price Provider Entities duly registered with the Superintendency, their name and registration number must be reported.
  • A Risk Statement, in font size not less than 12, which includes, as a minimum, the following aspects: That the investments made by a Real Estate Investment Company present high risks, because they are investments in real estate, in Representative titles of rights over real estate, or in the real estate development and administration business.
  • Any other information that the Superintendency considers relevant for the protection of the investor public.

Investment Policies.

  • Allowed Investments: o All types of real estate, including those whose construction has been completed and which have an occupancy permit.
    • Those real estate that are in the construction phase or in plan with a construction permit. o Those properties that do not have a preliminary project (limited to no more than 20% if REIT’s assets). o Purchase options and purchase and sale promises for a period of no more than 3 years and that the contracting parties do not establish restrictions on their free transfer (limited to no more than 20% if REIT’s assets). 
    • Securities, public or private, that enjoy real guarantees issued by companies that are dedicated to the real estate development and administration business.
    • Rights over real estate derived from concessions that allow real estate development and administration business to be carried out.
  • Shares, participation fees and other securities issued by real estate investment companies.
  • Incidental Investments are allowed up to 20% of its assets to be invested in savings accounts or fixed-term deposits in banks with a higher investment grade in the last twelve months, or in investment grade securities that are traded on a stock exchange or other organized market. In the case of financial instruments, they will only be allowed for hedging purposes.
  • Before making an Incidental Investment, the minimum Permitted Investments must be calculated, thus verifying that said Incidental Investment complies with the minimum Permitted Investments. Otherwise, the Real Estate Investment Company shall refrain from making the Incidental Investment that exceeds the proportion for Allowed Investments.
  • The Valuation of the assets must be on an annual basis in order to calculate the net value per participation quotas. Appraisals must be by guarantor companies.

Temporary Breach of Investment Policies.

The minimum of Allowed Investments may be breached:

  • The first year of operation.
  • Non-compliance resulting from a transfer.
  • Non-compliance resulting from a change in the market value of the Permitted Investments or Incidental Investments.

Information obligations with Investors and Reports to the Superintendency. 

The Investment Company will have the following obligations:

  • Make available to each investor a copy of the prospectus, the latest annual report and the last published semi-annual report.
  • Submit a monthly statement of account that reflects a detail of the investments, the evolution of the net asset value, the number of participation quotas issued and in circulation to date.
  • Once the fiscal period is over, REIT has 3 months to submit an annual explanatory report for the year that will contain a description of the company’s investments.
  • Make public any fact of importance according to what the Securities Market Law establishes.

Reports to the Superintence of the Securities Market.

The Real Estate Investment Company must submit semiannual reports to the Superintendency within two (2) months after the end of each semester. 

Registration at the Directorate of General Revenues.

In accordance with the provisions of article 3 of Executive Decree No. 199 of June 23, 2014, in order to enjoy the special tax regime applicable to real estate investment companies, it is required that these also be registered in the DGI, providing a memorial with the following documentation:

  1. Authentic copy of the articles of incorporation or of the trust instrument or of the contractual arrangement through which the real estate investment company was constituted and its reforms, in which it expressly indicates that its exclusive purpose will be the real estate development and administration business, with all its reforms in force to date.
  2. Authentic copy of the resolution of the SMV authorizing the registration of the Real Estate Investment Company.
  3. Evidence that the securities of the registered Real Estate Investment Company are listed on a stock exchange.
  4. Certification issued by the SMV whereby it is stated that at the end of the corresponding fiscal year said company is registered with the SMV, except in the case of a real estate investment company constituted during the fiscal year in which it is registered with the SMV, in which case you will only need to present this certification for the current year.
  5. Three (3) copies of the informative prospectus of the Real Estate Investment Company.
  6. Authentic copy of the annual report (IN-A) corresponding to the annual report for the immediately preceding period, presented to the SMV in compliance with the regulations in force by the Real Estate Investment Company, except in the case of a real estate investment company constituted during the fiscal year in which you were registered with the SMV, in which case you will not have to submit this report.
  7. Affidavit corresponding to what is indicated in article 122-C of Executive Decree 199 of June 23, 2014.

Juan Pablo Fábrega

Senior Partner

Pablo Martinelli


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