Morgan & Morgan advised Desarrollo Inmobiliario del Este in corporate matters related to its Real Estate Investment Trust.

Panama, February 18, 2024. Morgan & Morgan advised Desarrollo Inmobiliario del Este, S.A. (“DIESA”) in the process of a changing their corporate structure to that of a Sociedad de Inversión Inmobiliaria (the Panamanian equivalent of a Real Estate Investment Trust or “REIT”), in order for DIESA to carry out an initial public offering of its shares as a REIT.

Prior to the offering, DIESA had to be registered as a REIT before the Superintendence of Capital Markets of Panama (the “SCM”) and its shares had to be listed with the Latin American Stock Exchange, S.A. (the “Latinex”). For such purpose, we advised DIESA with the drafting of the amendment to its articles of incorporation, as well as the offering memorandum and other documentation of the REIT, file such documents with the SCM and Latinex and lead the client through the administrative process to obtain final approval for the public offering of the shares and their listing and placing through Latinex, among other matters.

REIT’s that comply with registration before the SCM, Latinex 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. The less burdensome tax regime of the REIT will allow DIESA to reduce its fiscal expenses, pay outstanding debts and improve its cash flow.

MMG Bank Corporation has been engaged as Payment and Transfer Agent, as well as Custodian and Placement Agent of the REIT, and MMG Asset Management Corp., acts as Investment Manager.

DIESA is the owner of the Business Park complex, a business center located in Costa del Este, Panama City. It comprises 5 buildings within an approximate area of 87,000 square meters. Tenants of the Business Park include leading local and multinational firms such as Telefonica, GBM and others.

Partner Ricardo Arias and international associate Miguel Arias M., participated in this transaction.