• COLL Part 12.6 COLL Part 12.6 Real estate investment trusts

    Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.1 Application of Part 12.6

      This Part applies to real estate investment trusts. The operator of a retail property fund that is, or is held out as, a REIT must (subject to rule 12.6.4) comply with this Part in addition to the other Parts of this Chapter.

      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.2 Real estate investment trusts or REITs

      (1) An operator, or a person marketing a fund, must not use the term “Real Estate Investment Trust” or “REIT”, or refer to a fund or otherwise hold out a fund as being a real estate investment trust, unless the fund is a QFC retail property fund that satisfies subrule (2).
      (2) A QFC retail property fund is a real estate investment trust (REIT) if:
      (a) the fund is a closed-ended scheme;
      (b) the fund is listed in the Qatar Stock Exchange or another regulated exchange;
      (c) the fund’s constitutional document and prospectus state that:
      (i) if the fund invests in vacant land for the purpose of development, the total value of those investments in vacant land must not exceed 20% of the value of the fund’s net assets;
      (ii) except to enable the fund to meet with its liquidity requirements, the fund will not borrow, or enter into any other transaction that will result in a financial obligation, if the fund’s total borrowings or obligations will exceed 50% of the value of its net assets;
      (iii) the fund will distribute to unitholders at least 80% of its audited annual net income (adjusted to exclude any fair value capital gains).
      Guidance
      1 For a REIT that holds an immovable through an intermediate holding vehicle or vehicles, the timing of distributions of income may depend on the law of the jurisdiction where the vehicle or vehicles are established.
      2 Nothing in this rule prevents a REIT from distributing more than the percentage stated in its constitutional document and prospectus. If the REIT proposes to distribute less than that percentage, rule 12.6.6 would apply and prior approval from unitholders would be required.

      Note A REIT must be a QFC collective investment company or a QFC collective investment trust (see rule 12.6.3). A REIT must be primarily aimed at investments in income-generating immovables (see definition of property fund).
      (3) If a REIT fails to satisfy a requirement in subrule (2) or in its constitutional document and prospectus, the operator and the independent entity of the REIT must notify the Regulatory Authority and the relevant exchange immediately, but within 1 business day. The notice must state any action that has been, or will be, taken to correct the breach.
      Amended by QFCRA RM/2019-5 (as from 1st July 2019)
      Amended by QFCRA RM/2020-6 (as from 15th October 2020).

    • COLL 12.6.3 Legal forms—REITs

      A real estate investment trust must take the form of a QFC collective investment company or a QFC collective investment trust.

      Note QFC collective investment company (CIC) and QFC collective investment trust (CIT) are defined in rules 1.3.7 and 1.3.9 respectively.

      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.4 Other provisions continue to apply to REITs

      (1) Except as set out in column 3 of table 12.6.4A, the provisions of these rules described in columns 1 and 2 continue to apply to a REIT.
      (2) Neither table 12.6.4A nor 12.6.4B is exhaustive. Each table is a guide for those who intend to establish and register a REIT.
      (3) Because a REIT cannot take the form of a partnership, provisions that require a QFC retail property fund to be a QFC collective investment partnership or CIP do not apply. As a general rule, provisions that deal with umbrella schemes or the redemption of units do not apply to REITs since REITs must be closed-ended.

      Table 12.6.4A Application of provisions to REITs

      column 1
      applicable provisions
      column 2
      description of contents of provisions
      column 3
      provisions that do not apply
      Chapter 1 general provisions, basic concepts and key terms rules 1.3.6 (b) and 1.3.8
      Chapter 2 registration of scheme  
      Chapter 3 constitutional requirements and units Division 3.2.B

      rules 3.1.1 (b) and 3.2.12
      Chapter 4 operator and independent entity  
      Chapter 5 investor relations, affected persons, prospectus, approvals, meetings, reports, accounts and auditors Divisions 5.4.A, 5.5.A and 5.6.B

      rules 5.6.1 (3), 5.6.9 (3), 5.6.11 (2) to (4), 5.6.12 (2) to (4), 5.6.13 (c), (l) and (m) and 5.6.17 (2) and (3),
           
      Chapter 7 investment and borrowing Parts 7.2, 7.3, 7.4, 7.5 and 7.6

      rules 7.1.10, 7.7.2, 7.7.3 and 7.7.6
      Chapter 8 operating duties and responsibilities, dealing, valuation pricing, register, outsourcing, payments, accounting and income distribution Divisions 8.1.A, 8.2.A, 8.2.C and 8.6.A

      rules 8.1.10, 8.2.5, 8.2.14, 8.3.1, 8.3.3 (2), 8.3.4, 8.6.6, 8.6.11, 8.8.1, 8.8.2 and 8.9.2 (2) and (4)

      Divisions 8.1.B, 8.2.B and 8.6.B in so far as they mention or allow redemption
      Chapter 9 suspension, winding up and transfer schemes rules 9.1.1 and 9.2.1
      Chapter 10 financial promotions and investment activities Parts 10.2 and 10.3
      Chapter 11 other provisions and fees Part 11.3
      Chapter 12 QFC retail property funds rules 12.5.1 and 12.5.6 (1) (c)
      Schedule 1 arrangements that are not collective investment schemes rules S1.14 (1) (b) and S1.15
      Schedule 2 contents of constitutional document Parts S2.2, S2.3 and S2.4

      rules S2.9 (b), S2.18 and S2.19
           
      Schedule 5 contents of prospectus  
      (4) CIPR also deal with collective investment schemes, and the definitions of packaged investment product and issuer in those rules include a unit in a collective investment scheme and the operator of a collective investment scheme, respectively. The provisions of CIPR described in table 12.6.4B may, among others, apply to REITs.

      Table 12.6.4B CIPR provisions that may apply to REITs

      column 1
      provisions
      column 2
      description of contents of provisions
         
      rules 3.5.7 and 3.5.9 inducements
      Part 3.6 personal account transactions
      Parts 4.2 and 4.3 advertisements, personal contacts and telephone contacts
      Part 4.4 initial disclosure document/terms of business
      rule 5.3.4 independent investment advice
      Part 5.4 and Schedule 1 key information document — form and contents

      Amended by QFCRA RM/2019-4 (as from 1st January 2020).

    • COLL 12.6.5 Extra constitution requirements—REITs

      (1) The constitutional document of a REIT must state:
      (a) that the fund is a real estate investment trust;
      (b) the exchange where the fund is listed;
      (c) the percentage (at least 80%) of its audited annual net income (adjusted to exclude any fair value capital gains) that the fund intends to distribute to unitholders; and
      (d) whether the fund is a collective investment company or a collective investment trust.

      Note Because a REIT is a QFC retail property fund, its constitutional document must also include the matters set out in rule 12.2.1, such as a statement that the fund invests in at least 3 immovables that generate recurrent rental income.
      (2) The income distribution policy required to be stated in the REIT's constitutional document must include:
      (a) the REIT's proposed distribution date or dates;
      (b) the person responsible for determining any adjustments (such as evaluation surplus and gains on disposal of immovables) to distributable income;
      (c) the basis for any adjustments mentioned in paragraph (b); and
      (d) if relevant, the procedures for calculating, paying and accounting for income equalisation.

      Note For the other statements about income distribution that the constitutional document of a REIT must contain, see rule S2.10.
      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.6 Proposal to distribute less than stated percentage

      If, for a particular annual distribution, the operator of a REIT proposes not to distribute the percentage (at least 80%) of its audited annual net income (adjusted to exclude any fair value capital gains) as stated in its constitutional document and prospectus, the proposal is taken to be a fundamental change for purposes of rule 5.4.2.

      Note Under rule 5.4.2, any fundamental change must have prior approval from the unitholders.

      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.7 REITs and intermediate holding vehicles

      If a REIT holds an immovable (whether located in or outside Qatar) through an intermediate holding vehicle, or a series of intermediate holding vehicles, the operator of the REIT must ensure that the vehicle, or each of the vehicles, distributes its income to the REIT. The income is to be distributed to the extent permitted by the law of the jurisdiction where the vehicle is established.

      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.8 Investments by REITs in immovables under development

      (1) Subject to subrule (2), the operator of a REIT must ensure that any investment in an immovable that is in the course of development (whether by the REIT on its own or in joint venture) is undertaken only if the REIT intends to hold the immovable on completion.
      (2) The total contract value of the immovable under development or redevelopment must not exceed 30% of the gross asset value of the REIT.
      (3) For this rule, development includes redevelopment but does not include refurbishment, retrofitting and renovation.
      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.9 COLL 12.6.9 Custody of immovables by REIT operator

      (1) The operator of a REIT may act as custodian of an immovable that is part of the fund's scheme property if the operator has:
      (a) adequate systems and controls to segregate and protect the immovable; and
      (b) effective arrangements to ensure that the immovable is not available to creditors of the operator if the operator becomes insolvent.

      Note Under rule 4.2.6 (6) (b), the independent entity of a REIT is not responsible in relation to an immovable held by the operator of the REIT as custodian in accordance with this rule. If the REIT operator acts as custodian, the fund's prospectus must state that fact (see rule S5.20 (1)).
      (2) The systems and controls to segregate and protect the immovable must ensure that:
      (a) legal title to the immovable is registered in the name of the fund;
      (b) the operator identifies, manages and monitors any conflicts of interest as a result of it acting as custodian; and
      (c) the operator designates by name or position the employees who are responsible for safeguarding the ownership rights of the fund over the immovable, including safekeeping documents evidencing title to the immovable.
      (3) In designating an employee under subrule (2) (c), the operator must have regard to conflicts of interest that may arise between the employee's function of safeguarding ownership rights and the employee's other functions.
      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

      • COLL 12.6.9 Guidance

        In identifying, managing and monitoring conflicts of interest that may arise from acting as custodian, the operator must take into account that it is required to give priority to unitholders' interests if there is a conflict between its own interests and those of unitholders.

        Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.10 Transactions with affected persons—REITs

      (1) The operator of a REIT need not comply with rules 5.1.3 and 5.1.4 (relating to notice and approval) for a transaction with an affected person if:
      (a) the transaction is for the acquisition or sale of an immovable in Qatar;
      (b) the operator has general unitholder approval to enter into such a transaction; and
      (c) the fund's independent entity has confirmed in writing, before the transaction is entered into:
      (i) that the transaction is on terms that comply with the requirement to negotiate at arm's length in rule 5.1.2 (2) (a); and
      (ii) that all other requirements have been complied with.
      (2) For subrule (1) (b), the unitholder approval must be by ordinary resolution passed at the previous annual general meeting of the fund. A unitholder who is an affected person proposing to enter into an affected person transaction, or a unitholder who is an associate of the affected person, must not vote on the resolution.
      (3) The resolution must authorise the operator to enter into transactions with affected persons for the acquisition or sale of immovables in Qatar without obtaining prior unitholder approval in each case during the period for which the resolution is valid. The resolution is valid only until the date of the next annual general meeting of the fund (when it may be renewed).

      Note The operator of a REIT must disclose the existence of such an approval in the fund's prospectus (see rule S5.20 (2)).
      (4) If the operator of a REIT enters into a transaction with an affected person under this rule, the operator must notify unitholders of the details of the transaction, including the identity of the affected person and the nature and extent of the person's interest. The notice must be given as soon as practicable after entering into the transaction.

      Note For service and form of notices to unitholders, see rules 11.1.2 and 11.1.3. Notice may be given in the fund's latest filed prospectus.
      (5) If the operator operates more than 1 fund and a transaction involves 2 or more of them, the transaction is taken to be a transaction with an affected person for each fund.
      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.11 Depositing cash with, and borrowing money from, affected persons—REITs

      (1) The operator of a REIT must not deposit, with an affected person, cash that is part of the REIT's assets unless:
      (a) the affected person is a regulated financial institution licensed to accept deposits; and
      (b) the rate of interest that is to be paid on the deposit is not lower than the prevailing commercial rate for a deposit of that size and term.
      (2) The operator of a REIT must not borrow money from an affected person unless:
      (a) the affected person is a regulated financial institution licensed to lend money; and
      (b) the rate of interest to be charged on the borrowing is not higher than the prevailing commercial rate for a borrowing of that size and term.
      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.12 Changes to disclosure about business with affected persons—REITs

      If after the initial disclosure there is a significant change in the information and statements required under rule S5.18 relating to the competing business of an affected person, the operator must notify the unitholders of the change.

      Note For service and form of notices to unitholders, see rules 11.1.2 and 11.1.3. Notice may be given in the fund's latest filed prospectus.

      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.13 When additional approval required from independent entity—REITs

      (1) This rule applies to a transaction between a REIT and an affected person if:
      (a) the transaction is in relation to:
      (i) services provided in the ordinary course of estate management of an immovable of the fund (for example, renovation and maintenance work); or
      (ii) engaging a property agent to provide services to the fund (for example, advisory services in transactions involving immovables); and
      (b) the value of the transaction is 5% or more of the fund's gross asset value, as disclosed in its latest audited accounts.
      (2) The operator must ensure that such a transaction is entered into only with the approval of the fund's independent entity.
      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.14 Duty to notify relevant exchange—REITs

      (1) The operator and the independent entity of a REIT must notify the exchange in which the REIT is listed if a material event occurs in relation to the REIT. The notice must be given immediately, but within 1 business day.
      (2) In this rule, material event includes:
      (a) an event, or change in circumstances, that is likely to have a significant adverse effect on the REIT or its unitholders;
      (b) an event, or change in circumstances, that is likely to result in material prejudice or damage to the REIT or its unitholders;
      (c) a failure, in a material respect, to comply with the operator's or independent entity's functions under these rules;
      (d) a major breach of the restrictions on the fund's investment and borrowing;
      (e) a material change in the fund's risk management process;
      (f) any matter (other than the issue or redemption of units in the ordinary course of business) that has a material effect on the size of the fund or the price of its units; and
      (g) any other matter that is likely to result in (or that is, under the exchange's rules, ground for) the suspension by the exchange of trading in listed units.
      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)

    • COLL 12.6.15 Duty to notify Regulatory Authority of trading suspension

      (1) If an exchange on which a REIT is listed suspends trading in the REIT's units, the operator of the REIT:
      (a) must immediately notify the Regulatory Authority orally about the suspension, giving the reasons (so far as the operator is aware of them) for the suspension; and
      (b) must give the authority written confirmation of the suspension and those reasons within 1 business day.
      (2) If the exchange permits trading in the units to re-start, the operator:
      (a) must immediately notify the Regulatory Authority about the exchange's decision orally; and
      (b) must give the authority written confirmation of the decision within 1 business day.
      Inserted by QFCRA RM/2016-1 (as from 19th September 2016)