Morgan & Morgan advised CM Realty, S.A. in the process of registering as a REIT before the Superintendence of the Securities Market of Panama and in the placement of its Ordinary Class B Shares through the Panama Stock Exchange, S.A.

Morgan & Morgan provided legal counsel to CM Realty, S.A. (“CM Realty”) in its constitution as a Sociedad de Inversión Inmobiliaria (the Panamanian equivalent of a Real Estate Investment Trust or REIT) in compliance with the requirements to enjoy the special tax regime set forth in paragraph 2 of article 706 of Panama’s Tax Code. For said purpose, Morgan & Morgan provided advice to CM Realty in registering with the Superintendence of the Securities Market of Panama (the Superintendencia del Mercado de Valores or “SMV”), the placing of its Ordinary Class B shares through the Stock Exchange of Panama, S.A. (the Bolsa de Valores de Panamá, S.A. or “BVP”) and registering with the General Revenue Office (the Dirección General de Ingresos or “DGI”) of the Ministry of Economy and Finance.  CM Realty was authorized by the SMV to publicly offer up to 9,987,500 of its Ordinary Class B Shares at an initial offering price of US$24.10.

REIT’s that comply with the above mentioned requirements of registration before the SMV, BVP and DGI, among other additional conditions, are exempt from the payment of income tax at the corporate level. Shareholders of a REIT pay income tax on distributions received from the REIT at the rates set forth in the Tax Code. However, all REITs are required to withhold 10% of amounts distributed to shareholders in the form of advanced income tax, which withholding the shareholder of a REIT may decide to consider as the definite and final income tax to be paid for the received distribution.

MMG Bank Corporation acted as Arranger, Payment and Transfer Agent, Custodian and Placement Agent of CM Realty and MMG Asset Management Corp. was appointed as Investment Manager of CM Realty. Morgan & Morgan worked closely with MMG Bank Corporation and MMG Asset Management in the process of assessment and inclusion of the real estate properties that comprise the investment portfolio of CM Realty and the definition of the final terms and conditions of their Ordinary Class B Shares.

CM Realty owns the properties where most of the stores of Cochéz y Cía. and Novey are located, the most important chain of construction materials and hardware stores in Panama, which rent said properties from CM Realty. Except in particular circumstances, CM Realty is required by law to distribute, just like any other REIT, no less than 90% of the net income of its fiscal period.

CM Realty offered its Ordinary Class B Shares through the BVP in August 2015. On that date, CM Realty was the first REIT to fulfill all the requirements to offer securities through the BVP and enjoy the special tax regime provided for in paragraph 2 of article 706 of the Tax Code of Panama.

Francisco Arias G, partner, and associates Ricardo Arias A. and Aristides Anguizola T., participated in this transaction.

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