Morgan & Morgan advised Grupo OTI in the constitution and registration of “Fondo de Inversión Inmobiliario Valle Lindo”.

Panama, August 5, 2023. We advised Grupo OTI, as sponsor, in the constitution and registration before the Superintendence of Capital Markets of Panama (the “SCM”), of a Panamanian investment fund named “Fondo de Inversión Inmobiliario Valle Lindo”. The investment fund was registered with the SCM as a Sociedad de Inversión Inmobiliaria (the Panamanian equivalent of a Real Estate Investment Trust or “REIT”) and it has been authorized by the SCM to offer to the public up to 1,000,000 shares of the fund (the “Shares”). For said purpose, Morgan & Morgan Legal provided advice to Grupo OTI in registering the REIT with the SCM, the listing of its Shares with the Latin American Stock Exchange, S.A. (“Latinex”) and registering the REIT with the General Revenue Office (the Dirección General de Ingresos or “DGI”) of the Ministry of Economy and Finance.  As of this date, the REIT has offered and placed more than 200,000 Shares of the fund through Latinex in three (3) different series.

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 Grupo OTI to reduce its fiscal expenses, pay outstanding debts, improve its cash flow and invest in the development of new projects.

The transaction involved a complex corporate operation, to carry out the “on-boarding” of the Grupo OTI companies that own and develop the various real estate projects into the structure of the REIT as subsidiaries thereof.

With presence in Panama, Venezuela and the US, Grupo OTI (“Grupo OTI”) is an award-winning and innovative company with 50 years of experience in the construction, real estate development and industrial services businesses in the aforementioned countries. Grupo OTI is the owner of distinguished brands such as Grupo OTI (construction), Alia (industrial) and Casa Propia (real estate development).

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