Shopping Centers Today International

NOV 2015

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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EITs arE aT ThE hEarT of ThE shopping center industry in the U.s., but in Latin america, with the notable ex- ception of Mexico, they play a much less dominant role. recent years have seen some countries pass regulations to allow rEITs and ease restrictions that have kept back institutional investors, such as pension funds. and yet the emergence of rEITs, particularly in the retail sector, has so far not been as strong as expected. R Low fIbra dIET reits (called fibras) have been slow to take off in latin america, but they are picking up steam in some countries By María Bird Picó n o v e m b e r 2 0 1 5 / S C T 35 brazil, Latin america's largest economy, has 260 rEITs, but many of them possess only a single property, or perhaps just a stake in a single property. In the dominican republic, two rEITs have been created since their authorization there in 2011, and both of those focus mainly on housing. Colombia has 14 non-publicly-traded rEITs, with diversified real estate portfolios and combined assets totaling some $3.1 billion, according to the Colombian association of Private Equity funds. retail real estate professionals there are holding talks with legislators in hopes of making these private capital funds more like U.s. rEITs by offering more tax benefits and opening the vehicles to public investment, according to Carlos hernán betancourt, executive director of acecolombia, Colombia's largest mall trade group. The reasons rEITs have been slow to take off in the region vary from country to country, but they boil down to such factors as regulatory hurdles, markets too small for building a significant portfolio, solid mall developers with no need for outside capital, and reluctance on the part of mall shareholders to sell to rEITs. rEITs do exist in argentina but enjoy little appeal because they offer no tax benefits to inves- tors, says Pedro Nicholson, a real estate lawyer in buenos aires. Neighboring Chile has one of Latin america's most vibrant retail real estate markets. here too there are rEITs, and here too they lack the sorts of tax benefits available through the U.s. model. Thus, they hold little drawing power among de- velopers and investors, according to Álvaro Jalaff, executive vice president of Chilean retail real estate developer Grupo Patio. furthermore, Chilean mall developers, which are active in nearby Colombia,

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