Is Uganda ready for REITs?
The Ugandan Collective Investment Schemes (Real Estate Investment Trusts) Regulations, 2017 (the “REIT Regulations”) are the latest initiative by the Capital Markets Authority (the “CMA”) in Uganda. The REIT Regulations provide a regulatory framework for property owners to raise capital using their existing properties and for investors to acquire a part of these properties or for those seeking to acquire real estate and undertake development and construction activities as a collective scheme.
We set out below the key provisions of the REIT Regulations.
What is a REIT scheme?
A real estate investment trust (“REIT”) scheme is an arrangement established for the purpose of collective investment by persons in real estate. The persons investing contribute money or money’s worth as consideration to acquire rights or interest to gain benefits from pooling funds and investment in real estate and earn profits or income from the real estate.
What kinds of REITs are there?
The I-REIT has demonstrated greater success over the D-REIT in other African jurisdictions with a track record in the issuance of REITs including South Africa and Nigeria. The CMA will therefore focus on the promotion of an I-REIT over a D-REIT.
Establishing the I-REIT
The prescribed minimum thresholds
The trustee and REIT manager have a fiduciary duty and are under an obligation to exercise due care and diligence in the performance their obligations. A trustee or REIT manager is liable for any loss, damage or depreciation in the market value of securities in which the REIT assets are invested where such loss, damage or depreciation arises as a result of a breach of duty and no provision in the trust deed or management agreement can exempt a REIT manager or trustee from such liability.
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