ADVOKS GLOBAL · KENYA
The Capital Markets (Real Estate Investment Trusts) (Collective Investment Schemes) Regulations
81. Maximum levels of borrowings by a D-REIT
Edition: 2023-10-06 · In force
81. Maximum levels of borrowings by a D-REIT
(1)The trustee of a D-REIT may, subject to any restriction or lesser limit imposed under the scheme documents, borrow or enter into financing arrangements—(a)on its own initiative where such borrowing is required to preserve the value of the assets of the trust and is in the best interests of the REIT securities holders; or(b)if requested to do so by the REIT manager,to give effect to the objectives of the scheme to acquire real estate assets, to undertake development and construction, to undertake capital expenditure or to refinance any existing borrowing.(2)The trustee may provide security over the assets of the real estate investment trust and scheme to secure the borrowings under paragraph (1).(3)Borrowings entered into by the trustee on behalf of a D-REIT or by any investee company or investee trust shall not exceed, in aggregate, at the time the liability is incurred, sixty percent of the total asset value:Provided that the limit in borrowings shall not operate to prevent the rolling over or refinancing of any debt where the amount rolled over or refinanced is not more than the amount originally borrowed, and(4)Despite paragraph (3), the trustee may, with the approval of REIT securities holders by way of an ordinary resolution borrow or enter into a financing arrangement up to a maximum of seventy five percent of the total asset value, for a temporary purpose for a term not exceeding six months.(5)Failure by the trustee to comply with the borrowing limitation under this regulation shall not constitute an offence.(6)Despite paragraph (5) and where the trustee exceeds the borrowing limits specified in this regulation—(a)D-REIT may cease to be classified as a real estate investment trust scheme for taxation purposes;(b)subject to the scheme documents, the REIT securities holders may institute a cause of action against the trustee or the REIT manager; and(c)the Authority may revoke the authorization issued to the REIT under regulation 18.