Dr. Mohammed Omran- FRA’s Chairman revealed that as part of FRA’s effort in developing and activating investment funds as a non-banking financial activity, and within the framework of facilitating the procedures of investment funds in general, and activating the role of Real estate investment trusts through removing the obstacles arising upon establishing the fund ,
In its session held mid-week, FRA’s BOD approved a draft amendment to some provisions governing Real estate investment trusts and stated in the Executive Regulations of the Capital Market Law.
Dr. Omran said that the Authority has conducted a social dialogue with a group of investment managers for real estate development companies to prepare the proposed draft amendment. The said amendments oblige Management Services Company to valuate financial assets and securities of unlisted funds – periodically- at least once every three months. Also, the amendments state that the valuation will be held every six months at a minimum (instead of every three months) in cases where the fund is not listed at the Stock Exchange to ease the financial burden on the Fund, due to the nature of some funds that target long-term investment in real estate assets or unlisted securities. He added that valuation shall be held every three months if the fund is listed at the Stock Exchange.
FRA’s Chairman added that the draft amendments stated that Fund’s real estate valuation shall be held by one or more real estate appraisers who are listed at the Authority (instead of requiring that the valuation shall be held by two appraisers ) , with the possibility of being valuated by more than one real estate appraisers if desired.
Dr. Omran said that the amendment sought to simplify the structure of Real estate investment trusts to allow the establishment of a real estate fund specialized in one of the areas stated in Article 183 of the Executive Regulations of the Capital Market Law. As well as amending FRA’s BOD decision no. 34 of 2014 on the rules governing real estate investment trusts, these rules which exempt the real estate investment trusts from the minimum limit set for investment in assets producing returns if its investment policy stipulates that.
Dr. Omran stressed that the proposed amendment was keen to avoid conflict of interest. It required the approval of group of certificate’s holders if the funds of the Fund will be directed in any of the investments or real estate assets directly or indirectly to any of the parties associated with or related to the Fund , and not exceeding (25%) of the Fund’s assets. Also, the assets shall be valuated by two real estate appraisers who are listed at the Authority and the valuation shall be approved by the Fund’s auditors.