Is an investment trust vehicle under Mexican law dedicated to the acquisition and development of real estate assets in Mexico intended for leasing. FIBRAs are similar to real estate investment trusts, or REITs, in the United States. This vehicle provides a new investment opportunity for investors.
The introduction of FIBRAs as an investment vehicle in Mexico and the establishment, in 2004, of the tax regime applicable to FIBRAs (through the securities it issues) represent a new kind of security available to investors. The legal structure of a FIBRA resulted from reforms enacted over the past several years to (i) various provisions of the Mexican tax laws and regulations, (ii) operating, trading and other Mexican regulations, (iii) the investment regime of the Mexican pension fund administrators (Administradoras de Fondos para el Retiro, or AFORES) permitting the tax-friendly investment in FIBRAs by Mexican pension funds and (iv) annual tax regulations issued by the Ministry of Tax (misceláneas fiscales).
In particular, recent regulations under the investment regime for the AFORES have classified FIBRAS as “structured instruments.” As a result, Mexican mutual funds specializing in retirement funds (Sociedades de Inversion Especializada en Fondos para el Retiro, or SIEFORES) may direct resources to CBFIs issued by FIBRAs, subject to their investment limitations (for SIEFORES 2, a maximum of 10%, and SIEFORES 3, 4 and 5, a maximum of 15% of their net assets, observing their diversification criteria provided in Order 15-19 of the Retirement Savings System National Commission (CONSAR). In addition, certain private Mexican pension funds, subject to compliance with the applicable provisions of Article 224 of the Mexican Income Tax Law, may invest up to 10% of their reserves in CBFIs issued by FIBRAs.
In addition, the macroeconomic stability of the Mexican economy in the last 17 years has facilitated the development of income-producing properties in Mexico, mainly in major and mid-size cities.
The rules and regulations governing FIBRAs under Mexican law have similar, as well as certain analogous, but nonetheless different, characteristics to the rules and regulations governing REITs under U.S. federal income tax law. The table below highlights the principal differences between FIBRAs and U.S. REITs: