The amendment to the “Communiqué on Principles Regarding Real Estate Investment Funds” by the CMB, with the aim of contributing to housing production, was published in the Official Gazette.
Accordingly, while the way was opened for real estate investment funds to invest in projects developed by themselves or others, the investment projects in question were limited to projects where “more than half of the total gross area of the independent section is reserved for residential use.”
According to the regulation that determines the principles that allow the establishment of a REIF, REIFs can be established to invest in real estate projects for which a report to be prepared by valuation institutions has determined that all necessary permits have been obtained in accordance with the legislation, the project is ready and approved, all documents required by law for the start of construction are complete, and more than half of the total gross area of the independent section is allocated for residential use.
HAVING A CONTRACTOR AUTHORITY CERTIFICATE IS REQUIRED
It will be mandatory for these established funds to include the phrase “project real estate investment fund” in their titles.
Project GYF portfolios will consist only of lands on which projects will be developed, real estate projects and a limited number of money and capital market instruments. In order to start the construction of a real estate project that meets the conditions specified in the draft circular on lands registered in the name of the fund in the land registry office within 3 years at the latest, it will be mandatory to fulfill all legal requirements.
In order to protect investors, it is envisaged that the rights arising from the fund’s revenue sharing agreements will be secured if the counterparty is not a public institution or public bank, while the contractor who will carry out the construction works will be required to have a contractor authorization certificate as stipulated in the relevant regulation regarding their qualification.
The issuance of participation shares or their return to the fund in kind will also be possible for project real estate investment funds.
The changes also simplified the umbrella fund structure of REIFs.
Accordingly, similar to investment funds, it was possible to create different REIFs affiliated with an umbrella fund, provided that a separate issuance document is prepared for each participation share issuance.
While it is stated that the issuance documents of GYFs should be prepared in a way that only includes the general principles regarding the funds, the details previously included in the information documents regarding GYFs will be included in the fund issuance agreement to be signed by the founders with the investors.
CHANGES HAVE BEEN MADE TO AVOID VICTIMIZATIONS FOR INVESTORS
Changes were also made to the regulation in order to prevent possible investor grievances.
In funds where participation shares can only be converted into cash at the end of the fund period, it has been made mandatory to grant investors who do not approve the changes the right to exit the fund in order to make changes to the information document that may affect the investment decisions of investors.
While an amendment was made regarding the responsibility of investment committee members limited to the decisions they make, existing funds whose portfolios are suitable for Project GYFs will be able to apply to the CMB to be converted into Project GYFs within 1 month from the entry into force of the amendment.
Source: www.cumhuriyet.com.tr
