Technical Standards for Closed-End Real Estate Development Investment Funds

Alameda Juan Pablo II, between 15 and 17 North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-12/2018
NDMC-19
TECHNICAL STANDARDS FOR CLOSED-END REAL ESTATE DEVELOPMENT INVESTMENT FUNDS Approval: 11/21/2018 Validity: 12/10/2018

THE COMMITTEE OF STANDARDS OF THE CENTRAL RESERVE BANK OF EL SALVADOR,

CONSIDERING:

I. That Article 5 of the Investment Funds Law establishes that Investment Fund Managers, their operations, and other participants regulated by the Law are subject to the supervision of the Superintendency of the Financial System.

II. That Article 45 of the Investment Funds Law establishes that in a Closed Fund, investors may make contributions in addition to money in real estate assets, which must be free of all encumbrances and accompanied by the investor's tax solvency certificate from the Tax Administration.

III. That Article 47, third paragraph of the Investment Funds Law, regulates that the content of the extract of the Fund's Internal Regulations and the Placement Prospectus of participation shares shall be established by the Central Reserve Bank of El Salvador through Technical Standards.

IV. That Article 62 of the Investment Funds Law refers to the documents that the Investment Fund Manager must accompany with the request to be recorded in the Register of Investment Funds kept by the Superintendency of the Financial System.

V. That Article 63 of the Investment Funds Law establishes that Closed-End Investment Funds, as well as their issuances, must be recorded in the Register kept by the Superintendency of the Financial System for such purposes and subsequently must be registered in a stock exchange, complying with the requirements established in the Securities Market Law insofar as they do not contradict the aforementioned Law.

VI. That Article 97, third paragraph of the Investment Funds Law establishes that Closed-End Investment Funds may invest in real estate located in El Salvador.

VII. That Article 99, second paragraph of the Investment Funds Law establishes that, in the case where the investment policy of an Investment Fund includes real estate, it must consider minimum and maximum limits.

VIII. That Article 6, letter m) of the Securities Market Law establishes that the Public Stock Register will have a special Register of Closed-End Investment Funds.

IX. That Article 9, second paragraph, numbers 10 and 11 of the Special Law for the Prevention, Control and Sanction of Money Laundering, Terrorism Financing and Financing of the Proliferation of Weapons of Mass Destruction, regulates that obligated subjects must establish internal audit mechanisms, using the principle of risk-based administration, to verify compliance with what is prescribed in said Law; and have external or specialized audit in risk management to evaluate and issue reports on the evaluation of the management of the prevention system. (4)

X. That Article 15, first paragraph of the Special Law for the Prevention, Control and Sanction of Money Laundering, Terrorism Financing and Financing of the Proliferation of Weapons of Mass Destruction, establishes that obligated subjects to achieve identification of their clients and users, including the controller, recipient or ultimate beneficiary, managing the risks associated with them and obtaining appropriate information about the commercial relationships entered into or their continuity, must take reasonable measures to carry out due diligence procedures. (4)

THEREFORE,

by virtue of the regulatory powers conferred by Article 99 of the Law for the Supervision and Regulation of the Financial System,

AGREES to issue the following:

TECHNICAL STANDARDS FOR CLOSED-END REAL ESTATE DEVELOPMENT INVESTMENT FUNDS

CHAPTER I
OBJECT, SUBJECTS AND TERMS

Object
Art. 1.- These Standards aim to establish the provisions applicable to Closed-End Real Estate Development Investment Funds regarding their registration, operation, operability, policies, valuation of their investments, the limitations they must observe, and other related aspects.

Closed-End Investment Funds that include in their investment policy the development of real estate located in El Salvador for their completion or sale, will apply the provisions established in these Standards.

Subjects
Art. 2.- The subjects obligated to comply with the provisions established in these Standards are:
a) Investment Managers of Closed-End Real Estate Development Investment Funds, authorized by the Superintendency of the Financial System, who work for an Investment Fund Manager; b) Investment Fund Managers authorized by the Superintendency of the Financial System that manage Closed-End Real Estate Development Investment Funds in accordance with what is established in the Investment Funds Law; and c) Marketing Entities or Agents.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Investment Manager: natural person who is employed by an Investment Fund Manager for the purposes of managing the decision-making and execution of investments made with resources from Closed-End Real Estate Development Investment Funds in accordance with the internal regulations and investment policy thereof. Within this category is included the Investment Manager or whoever acts in their place, according to the organizational structure of the Manager; b) Central Bank: Central Reserve Bank of El Salvador; c) Stock Exchange: Stock Exchange constituted in El Salvador and registered in the Superintendency of the Financial System; d) House: Stockbrokerage House, authorized and registered in the Superintendency of the Financial System; e) Financial Conglomerate: in accordance with Article 113 of the Banks Law, it is a set of companies characterized by the fact that more than fifty percent of their respective share capital is owned by a controlling company, which is also a member of the Conglomerate. The controlling company of the Conglomerate may be a company with exclusive purpose or a bank constituted in the country; f) Shares: participation shares; g) Marketing Entity or Agent: Stockbrokerage House as well as another legal entity authorized by the Superintendency of the Financial System for the marketing of Investment Fund shares and which has signed an agency contract with an Investment Fund Management Company for the marketing of participation shares of Closed-End Real Estate Development Investment Funds; h) Funds: Investment Funds; i) Real Estate Development Funds: Closed-End Real Estate Development Investment Funds are independent estates administered by an Investment Fund Management Company on behalf and at the risk of the participants, which have as their object the investment in real estate projects for their completion, sale or lease with the object of generating profitability for the Fund participants; j) Manager: Investment Fund Management Company; k) Business Group: in accordance with Article 5, letter n) of the Securities Market Law, it is that in which a company or set of companies have a common controller, who acting directly or indirectly participates with fifty percent as a minimum in the share capital of each of them or that have common shareholders who, directly or indirectly, are holders of fifty percent as a minimum of the capital of another company, which allows to presume that the economic and financial performance is determined by common interests or subordinate to the group; l) Investor: natural or legal person interested in acquiring participation shares of an Investment Fund; m) Special Law for the Prevention of Money Laundering: Special Law for the Prevention, Control and Sanction of Money Laundering, Terrorism Financing and Financing of the Proliferation of Weapons of Mass Destruction; (4) n) Funds Law: Investment Funds Law; o) Market Law: Securities Market Law; p) Supervision and Regulation Law: Law for the
Supervision and Regulation of the Financial System; q) Participant: investor in an Investment Fund; r) Related Persons: in accordance with Article 29 of the Funds Law, those regulated in Article 204 of the Banks Law will be considered related persons to the Manager; s) Investment Policy: in accordance with Article 99 of the Funds Law, it corresponds to the investment policy defined in the internal regulations and prospectus of each Investment Fund, and which points out the minimum and maximum limits of investment in each of the types of assets contemplated in Article 34 of these Standards; t) Placement Prospectus: placement prospectus of participation shares; u) Register: Public Stock Register of the Superintendency of the Financial System; v) Internal Regulations: document that contains all the specific characteristics and rules that govern the operation of a certain Investment Fund; and w) Superintendency: Superintendency of the Financial System.

CHAPTER II
GENERAL PROVISIONS ON REAL ESTATE DEVELOPMENT FUNDS

Applicable Regulation
Art. 4.- The following provisions contained in the following Standards approved by the Central Bank through its Committee of Standards are applicable to Real Estate Development Funds in everything that does not contradict these Standards:
a) “Technical Standards for the Authorization of Constitution, Start of Operations, Registration and Management of Operations of Investment Fund Managers” (NDMC - 02); b) “Technical Standards for the Authorization and Registration of Investment Managers of Investment Funds” (NDMC - 03); c) “Technical Standards for the Authorization, Registration and Operation of Investment Funds” (NDMC - 06); d) “Technical Standards for the Investments of Investment Funds” (NDMC - 07); e) “Technical Standards for the Calculation of the Value of the Participation Share and Assignment of Participation Shares” (NDMC - 11); f) “Technical Standards for the Transmission and Disclosure of Information of Investment Funds” (NDMC-13); g) “Technical Standards for the Transfer or Merger of Investment Funds” (NDMC - 16); h) “Technical Standards for Closed-End Real Estate Investment Funds” (NDMC - 17); and i) “Technical Standards for the Registration of Appraisers and their Professional Obligations” (NRP-27). (2)

Real Estate Development Projects
Art. 5.- Real Estate Development Funds may invest in projects that meet the following:
a) Be located in the national territory; b) Have a deadline for their completion; c) Have a project feasibility study in accordance with Annex No. 1 of these Standards; and d) The construction carried out by Real Estate Development Funds must be carried out by a third party.

Characteristics of a Real Estate Development Fund Art. 6.- Real Estate Development Funds are constituted as Closed Funds with a defined term, have as their object the investment in real estate projects for their completion, sale or lease with the object of generating profitability for the Fund participants. The investments they make in real estate may only assume the risks inherent to the development, completion and lease thereof. Participants of these Funds may only receive what corresponds to them from their participation shares at the end of the Fund's term, as established in the Funds Law, their shares being negotiable in the secondary market. Regarding the lease of real estate, the obligations stipulated in the “Technical Standards for Closed-End Real Estate Investment Funds” (NDMC-17), approved by the Central Reserve Bank through its Committee of Standards, must be considered.

Identification and profile of the investor
Art. 7.- The Manager must establish clearly and precisely in the internal regulations, the risk profile of the investor to which the Real Estate Development Fund is oriented, which must be in accordance with the object of the Fund. The Manager must have policies and procedures to determine the risk profile of investors in order to correctly categorize them and determine those that match the investor profile to which the Real Estate Development Fund is directed; for this, the Manager must inform clearly, timely and precisely about its characteristics, explaining at least that Real Estate Development Funds are of medium or long term and that if the investor decides to obtain liquidity from their shares in the secondary market in a stock exchange, this will depend on the market conditions at that time. It is the responsibility of the Manager to ensure that the shares of Real Estate Development Funds are marketed to investors whose risk profile coincides with the investor profile to which the Fund has been directed. In the case that the Manager markets its shares to investors whose risk profile does not coincide with the profile required by the Fund, it must comply with what is established in Chapter VI of the “Technical Standards for the Process and Registration of Buy and Sell Orders of Securities of Stockbrokerage Houses” (NDMC - 01), approved by the Central Reserve Bank through its Committee of Standards, documenting that the Manager issued a warning to the investor about the main risks and characteristics of the shares, the object and investment policy of the Fund and that said Fund is not in accordance with the risk profile determined in the analysis performed on the investor, additionally specifying the client category determined by the Manager or agent. The aforementioned document must be signed by the participant and by the General Manager in accordance with what is established in the Technical Standards referred to in this article. If the marketing of shares is done through a House, it must carry out the procedure described in this article and Article 8 of these Standards.

Promotion of the Real Estate Development Fund
Art. 8.- Real Estate Development Funds must express their object in their internal regulations, as well as in any document sent to participants and in any information regarding the Real Estate Development Fund that is disseminated by the Manager through its website or any advertising material. Likewise, they must express in their internal regulations, the types of construction projects in which they will invest their resources; said projects must have a set time for their construction and have a specific result in accordance with the Fund's internal regulations. In the disclosure of information and advertising that is made of the Real Estate Development Fund, it will be the responsibility of the Manager to ensure that the name and object of the Fund do not induce error or confusion in investors or participants, regarding their investment policy, their risk or liquidity of the shares.

The Manager and the persons who carry out the function of marketing shares in accordance with what is established in Article 26 of the Funds Law, will be responsible for explaining to the investor the characteristics of the Real Estate Development Fund, specifying the types of projects it will develop as well as the methods of valuation of the investments made in accordance with what is established in the internal regulations and placement prospectus of the Fund.

CHAPTER III
AUTHORIZATION AND REGISTRATION OF REAL ESTATE DEVELOPMENT FUNDS

Request for Registration of a Real Estate Development Fund and authorization of documents Art. 9.- For the authorization of entry in the Register of Closed Funds, the legal representative or attorney-in-fact of the Manager, must present to the Superintendency a request accompanied by the following information and documentation:
a) Certification of the agreement of the Board of Directors of the Manager in which the constitution of the Real Estate Development Fund was agreed, as well as the approval of the internal regulations and the placement prospectus; b) Draft deed of issuance of participation shares; c) Project feasibility study in accordance with Annex No. 1 of these Standards; d) Internal regulations, which must include the minimum content defined in Annex No. 2 of these Standards; e) Placement prospectus of shares, which must include the minimum content defined in Annex No. 3 of these Standards; f) Certified copy of the construction permit necessary for the realization of the project, which must be approved by the corresponding authority in the jurisdiction where the real estate is located, it will be the responsibility of the Manager to ensure that the project has the necessary permits for its development; g) Document that ensures the promise of sale of the real estate; h) Model of subscription contract of shares between the Manager and the participant; i) Draft of the documents related to the guarantee, which the Manager will constitute or modify for the Real Estate Development Fund in accordance with its nature, in consideration of what is established in Article 22 of the Funds Law; j) Certification of the agreement of the Board of Directors of the Manager in which the entity that will be the representative of the beneficiaries of the guarantee is designated; k) Acceptance of the entity as representative of the beneficiaries of the guarantee; l) Method of valuation of the assets of the Real Estate Development Fund; m) Manual of procedures and policies for the handling of operations that are carried out in the administration of the Real Estate Development Fund, responsible personnel who will intervene in said procedures, including flowcharts that describe the process of the management of the Real Estate Development Fund in which the activities, departments, the hierarchical levels that intervene in them and the models of forms that they will use in the administration of these, such as: signature register, client identification forms, account statements, daily availability control, guidelines for payments in concept of work progress and all those related to the development of the project, among others; n) Name of the person(s) designated as investment manager(s), specifying the date of authorization of the registry entry by the Superintendency; o) Projections of income and expense flows for the first five years of the Real Estate Development Fund. If the term is less than that established in this letter, the projections will be presented for the maturity term of the Fund; p) Accounting system of the Real Estate Development Fund, which will be used by the Manager and the description of the computer platform on which it has been developed, its information systems, description of information backups, security and controls in the systems. The accounting systems must
be presented in accordance with the “Accounting Manual for Investment Funds” (NDMC - 08); and q) Other documentation and information that by the nature of the Real Estate Development Fund is necessary to present. In the request, the means to receive notifications and the designation of the persons commissioned for such effect must be established. (3) The projections referred to in letter o) of this article, will be carried out in accordance with the model established by the Manager, documenting the basic assumptions of said projections which must be coherent, supporting each of the variables of the model used.

The procedure for the entry of the Fund may be initiated without the presentation of the information required in letter f) of this article, but said requirement will be necessary for the authorization of the entry of the Fund in the Register at the Superintendency. The request and documentation may be presented through the means made available by the Superintendency, which may be electronic. In any case, the term referred to in the first paragraph of Article 12 of these Standards will start to run from the next business day after the request has been presented. (3)

Model of subscription contract of participation shares Art. 10.- The model of subscription contract of participation shares, must include at least what is established in the “Technical Standards for the Authorization, Registration and Operation of Investment Funds” (NDMC-06), approved by the Central Reserve Bank through its Committee of Standards and will observe what is regulated in Article 22 of the Consumer Protection Law and what is established in the Regulation of the Consumer Protection Law relative to the adhesion contract.

Extract of the internal regulations and placement prospectus Art. 11.- The Manager shall prepare an extract of the internal regulations and placement prospectus, which shall form part of the respective internal regulations and placement prospectus. These extracts shall contain summarized information detailed in Annex No. 2, numeral 5) and Annex No. 3, numeral 6) of these Standards.

Authorization Procedure in the Registry
Art. 12.- Upon receipt of the authorization request for the entry in the Real Estate Development Fund Registry, in accordance with Article 9 of these Standards, the Superintendence shall verify compliance with the requirements defined by the Funds Law and these Standards, having up to thirty business days, in accordance with Article 62 of the Funds Law, to authorize and register or deny the Fund. (3)

If the request is not accompanied by the complete and properly formatted information detailed in Article 9 of these Standards, the Superintendence, due to the lack of necessary requirements, may require the applicants to present the missing documents within a period of ten business days counted from the day following the notification, a period that may be extended at the request of the Manager, when there are reasons justifying such extension. (3)

The Superintendence, in the same notice, shall indicate to the applicants that if they do not complete the information within the aforementioned period, it will proceed without further procedure to archive the request, leaving them free to submit a new request. (3)

If, after analyzing the documentation presented in accordance with Article 9 of these Standards, the Superintendence has observations or when the documentation or information presented is not sufficient to establish the facts or information intended to be accredited according to the type of authorization process; the Superintendence may notify the Manager once to remedy the communicated deficiencies or present additional documentation or information requested. (3)

The Manager shall have a maximum period of ten business days counted from the day following the notification, to resolve the observations or present the information requested by the Superintendence. (3)

The Superintendence may, through a reasoned resolution, extend by up to another ten business days, the period indicated in the previous paragraph, when the nature of the observations or notified deficiencies so requires. (3)

Extension Period (3)
Art. 12-A.- The Manager may submit to the Superintendence a request for extension of the period indicated in the fifth paragraph of Article 12 of these Standards, before the expiration of said period, stating the grounds for the request and proposing, if applicable, the relevant evidence. (3)

The extension period may not exceed ten business days and shall begin from the business day following the expiration date of the original period. (3)

Suspension of the Period (3)
Art. 12-B.- The thirty-day period indicated in the first paragraph of Article 12 of these Standards, shall be suspended for the days that elapse between the notification of the request to complete information or documentation referred to in the second and fifth paragraphs of said Article, until the interested parties remedy the observations requested by the Superintendence. (3)

Once the complete and properly formatted documentation is presented, the Superintendence shall proceed to respond to the authorization request for the entry in the corresponding Fund Registry. (3)

Submission of Documents to the Superintendence Art. 13.- In the event that the agreement by the Superintendence is favorable, the Manager, within a maximum period of thirty business days from the communication of said agreement, must make the payment of registration fees and submit the definitive documentation detailed below:
a) Deed of issuance of quotas; b) Internal regulations of the Real Estate Development Fund, signed by the authorized person, including all annexes referenced therein; c) Placement prospectus, signed by the authorized person, including all annexes referenced therein; d) Documentation proving the establishment of the guarantee required in Article 22 of the Funds Law; and e) Quota subscription agreement, duly deposited with the Superintendence. Upon receipt of the documentation by the Superintendence and verifying that it conforms to that authorized by said Superintendence, it shall proceed to issue the registry entry for the Real Estate Development Fund within a maximum period of five business days from the date the definitive documents are presented and communicate it to the Manager within a maximum period of three business days from the date the registry entry was issued. Art. 14.- Subsequent to the receipt of the communication of the registry entry and prior to the placement of the quotas, the Manager shall submit within a period of five business days to the Superintendence the certification of the minutes of its Board of Directors meeting, in which the appointment of the Supervisory Committee that will act provisionally until the first participants' assembly is recorded, in accordance with Article 77 of the Funds Law.

Modification of the Fund
Art. 15.- When the Manager intends to modify the internal regulations, the placement prospectus, the model of the quota subscription agreement, or the deed of issuance of participation quotas, it must submit to the Superintendence the authorization request for modification of said documents in accordance with Article 70 of the Funds Law, attaching for these purposes the following documentation:
a) Certification of the minutes of the extraordinary participants' assembly in which the modifications to the internal regulations were approved, once the Fund has reached the minimum assets and minimum number of participants required; b) Certification of the authorization agreement, issued by the Board of Directors or by the participants' assembly, as applicable, for the quota subscription agreement, placement prospectus, and issuance deed; c) Model of quota subscription agreement including the modifications to be made; d) Draft issuance deed; e) Detail of the proposed modifications, including the justification for them, as well as supporting documentation when applicable; f) Draft documents that are required to be authorized by the Superintendence in which the requested modification proposals will be incorporated; and g) Model of publication and communication to be sent to the participants when applicable, specifying the content of each of the modifications, detailing the contact information designated by the Manager to handle inquiries. The request and documentation may be submitted through the means made available by the Superintendence, which may be electronic. In any case, the period referred to in the first paragraph of Article 15-A of these Standards shall begin to run from the business day following the submission of the request. (3) Procedure for Modification of the Registry Entry (3) Art. 15-A.- Upon receipt of the request for modification of the Fund's Registry Entry, in accordance with Article 15 of these Standards, the Superintendence shall verify compliance with the requirements defined by the Funds Law and these Standards, having a period of up to thirty business days to authorize or deny the modification of the corresponding Registry Entry. (3) If the request is not accompanied by the complete and properly formatted information detailed in Article 15 of these Standards, the Superintendence, due to the lack of necessary requirements, may require the Manager to present the missing documents within a period of ten business days counted from the day following the notification, a period that may be extended at the request of the Manager when there are reasons justifying such extension. (3) The Superintendence, in the same notice, shall indicate to the Manager that if they do not complete the information within the aforementioned period, it will proceed without further procedure to archive the request, leaving them free to submit a new request. (3) If, after analyzing the documentation presented in accordance with Article 15 of these Standards, the Superintendence has observations or when the documentation or information presented is not sufficient to establish the facts or information intended to be accredited; the Superintendence shall notify the respective Manager once to remedy the communicated deficiencies or present additional documentation or information requested. (3) The Manager shall have a maximum period of ten business days
counted from the day following the notification, to resolve the observations or present the information requested by the Superintendence. (3) The Superintendence may, through a reasoned resolution, extend by up to another ten business days, the period indicated in the previous paragraph, when the nature of the observations or notified deficiencies so requires. (3) Extension Period (3) Art. 15-B.- The Manager may submit to the Superintendence a request for extension of the period indicated in the fifth paragraph of Article 15-A of these Standards, before the expiration of said period, stating the grounds for the request and proposing, if applicable, the relevant evidence. (3) The extension period may not exceed ten business days and shall begin from the business day following the expiration date of the original period. (3)

Suspension of the Period (3)
Art. 15-C.- The thirty-day period indicated in the first paragraph of Article 15-A of these Standards, shall be suspended for the days that elapse between the notification of the request to complete information or documentation referred to in the second and fifth paragraphs of said Article, until the interested parties remedy the observations requested by the Superintendence. (3) Once the complete and properly formatted documentation is presented, the Superintendence shall proceed to notify the resolution of the request for modification of the Fund's Registry Entry, within a maximum period of three business days from the date the resolution was issued. (3)

Disclosure of Modifications
Art. 16.- The modifications to the internal regulations, placement prospectus, and issuance deed resulting from the Fund's subsequent issuance process, shall enter into force fifteen days after the authorization is notified by the Superintendence, with the Manager proceeding to disclose them through its website and inform the participants, the Manager having procedures to document the receipt of said notification in accordance with Article 70 of the Funds Law and the "Technical Standards for the Submission and Disclosure of Information of Investment Funds" (NDMC -13), approved by the Central Bank through its Standards Committee.

Subsequent Issuances
Art. 17.- The extraordinary participants' assembly may agree on a capital increase through new issuances of quotas, provided that at least 80% of the initially issued quotas are fully placed and that their term has a maturity date equal to the initial term of the Fund. Art. 18.- For the authorization request for capital increases, the Manager must observe the provisions of Articles 70 to 74 of the Funds Law, and its legal representative or attorney must submit to the Superintendence a request accompanied by the following documentation:
a) Copy of the two reports from independent experts supporting the determination of the placement price; b) Certification of the minutes of the extraordinary participants' assembly meeting in which the capital increase of the Fund through new quota issuances was approved; c) Indication of the use of resources, including the characteristics of the investments the Real Estate Development Fund will make according to its investment policy; d) Projections of income and expenses considering the increase in the Real Estate Development Fund's assets for the remaining period until project completion, as well as the assumptions supporting the projections; e) Project feasibility study in accordance with Annex No. 1 of these Standards; f) Draft documents related to the guarantee the Manager will establish or modify for the Real Estate Development Fund, according to its nature considering the capital increase; g) Draft deed of modification of the issuance; and h) Internal regulations and placement prospectus for participation quotas including the modifications approved in the extraordinary participants' assembly.

The documents established in letters h), j), k), and l) of Article 9 of these Standards, must be submitted to the Superintendence in the event that they require modification considering the capital increase.
In addition to what is established in this Article, the authorization process established in Articles 15-A, 15-B, and 15-C, as well as the disclosure process provided in Article 16 of these Standards, must be observed. (3) The request and documentation may be submitted through the means made available by the Superintendence, which may be electronic. In any case, the period referred to in the first paragraph of Article 15-A of these Standards shall begin to run from the business day following the submission of the request. (3) REPEALED (3)

Notice of Placement of Subsequent Issuances
Art. 19.- In addition to what is provided in Article 16 of these Standards, the Manager must publish, prior to the effectiveness of the modifications approved by the Superintendence, the placement conditions of the subsequent issuances of a Fund, through a prominent notice in the newspaper indicated in the internal regulations, which must contain at minimum the following information:
a) Name of the Fund; b) Name of the Manager; c) Reference to the extraordinary participants' assembly in which the increase in the Fund's assets was agreed; d) Date and session of authorization of the capital increase by the Superintendence; e) The amount agreed to increase the Fund's assets, including the number of quotas it represents; f) Characteristics of the issuance such as: currency, term (detailing the maturity date of the issuance), placement price, number of quotas to be issued, method of updating the placement price during the subscription period; g) Purpose for which the capital increase is required; h) Risk classification of the Fund and the entity issuing it; i) Expiration date of the preferential subscription period; j) Period for receiving subscription requests with preferential subscription rights, considering that the maximum period is thirty days counted from the date of publication of the placement notice; k) Period for the issuance, subscription, and payment of the quotas; l) Person responsible for performing the subscription, specifying whether it will be done directly by the Manager or through an agent; m) Placement at the counter or on the Stock Exchange; n) Procedure in case the issuances are considered failed; o) Rights and obligations of the participants regarding the capital increase; p) Place and person designated to handle inquiries related to the Fund's capital increase; and q) Other information the Manager considers important. From the publication of the placement notice, participants shall have the right to subscribe to the quotas in accordance with the conditions and period established in Article 73 of the Funds Law.

Art. 20.- In the event that the issuance results in failure, the Manager shall proceed in accordance with Articles 66 and 74 of the Funds Law.

Independent Expert
Art. 21.- Independent experts are understood to be those referred to in Articles 72 of the Funds Law and 18, letter a) of these Standards, being natural persons who hold a university degree in Engineering, Public Accounting, Business Administration, Economics, or other related fields; and who have training in finance or, in the absence thereof, specialized training in asset valuation, related to the investments made by the Fund, in accordance with its investment policy. The Manager is responsible for verifying that independent experts do not have conflicts of interest such as being a director of the Manager, administrator, or employee of the Manager or participant of the Fund. In the event that the independent expert is a company, the foregoing applies to the personnel working in said company who provide the service to the Manager for the determination of the placement price of subsequent issuances.

Capital Reductions
Art. 22.- Real Estate Development Funds may effect voluntary and partial capital reductions in the manner, conditions, and periods specified in the internal regulations. The reduction of the Fund's capital may be carried out for the purposes indicated in Article 76 of the Funds Law, with the Manager publishing a notice in the newspaper indicated in the internal regulations, disclosing it on its website, and informing participants directly, the Manager having procedures to document the receipt of said notification, in accordance with Article 76 of the Funds Law and the "Technical Standards for the Submission and Disclosure of Information of Investment Funds" (NDMC -13), approved by the Central Bank through its Standards Committee. Art. 23.- For the case of capital reduction of the Real Estate Development Fund, the Manager, through its legal representative or attorney, must submit to the Superintendence the following documentation:
a) Certification of the minutes of the extraordinary participants' assembly meeting in which the capital reduction was approved; b) Schedule of payment dates and methodology for calculating the value of the quotas of participants exercising the withdrawal right; c) Internal regulations and prospectus including the modifications approved in the extraordinary participants' assembly; d) Detail of the purpose for which the capital reduction was agreed; and e) If the capital reduction is due to the absorption of losses generated in the Fund's operations, detail the causes that generated said losses. In addition to what is established in this Article, the Manager must submit, where applicable, the information and documents referred to in Article 15 of these Standards, observing the authorization process established in Articles 15-A, 15-B, and 15-C, as well as the disclosure process provided in Article 16 of these Standards. (3) The request and documentation may be submitted through the means made available by the Superintendence, which may be electronic. In any case, the period referred to in the first paragraph of Article 15-A of these Standards shall begin to run from the business day following the submission of the request. (3)

Archiving of Proceedings Initiated by Registration Request Art. 24.- The Superintendence shall proceed without further procedure to archive the proceedings initiated in the registration procedure detailed in these Standards, when the following situations occur:
a) The Manager has not remedied the observations or has not presented the information requested, in accordance with Articles 9, 13, 18, and 23 of these Standards; b) The Superintendence revokes the authorization for not presenting the information requested in Article 15 of these Standards; or c) The Manager submits a letter to the Superintendence, informing the desire to withdraw the request, at any time. In any case, the interested parties maintain their right to submit a new request to the Superintendence, which will result in a new procedure.

Communication of Quota Placement
Art. 25.- For the purpose of placing the quota issuance, the Manager must communicate to the Superintendence the planned placement date, within a minimum period of three business days prior to the planned date for the placement of the issuance, as well as its placement method, attaching a copy of the agreement or resolution regarding the same.

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-12/2018
NDMC-19
TECHNICAL STANDARDS FOR CLOSED-END REAL ESTATE DEVELOPMENT INVESTMENT FUNDS Approval: 11/21/2018 Effective Date: 12/10/2018 adopted by the competent authority of the Manager. (3)
CHAPTER IV
OPERATION OF REAL ESTATE DEVELOPMENT FUNDS

Fund Net Asset Value of the Real Estate Development Fund Art. 26.- Real Estate Development Funds must reach the minimum net asset value and number of participants referred to in Article 61 of the Funds Law, within a period of six months counted from the date on which the Real Estate Development Fund was recorded in the Registry, and must permanently comply with said requirements. If the Real Estate Development Fund does not reach the required minimum net asset value and number of participants within the previously defined timeframe or fails to comply with said requirements at any time, the Manager must communicate this to the Superintendency on the next business day, who may grant a deadline for compliance.

When the Manager does not remedy the non-compliance indicated in the previous paragraph, it must communicate this to the Superintendency within the two business days following the expiration of the granted deadline, proceeding with the liquidation of the Real Estate Development Fund, in accordance with what is established in Articles 61, 65, 66, 103, and 105 of the Funds Law and what is established in these Standards.

In the case where the initial net asset value of the Fund is higher than the minimum required in Article 61 of the Funds Law and if upon finishing the deadline for the issuance, subscription, and payment of participation shares referred to in Article 65 of the Funds Law, the required net asset value is not reached, the capital will be reduced to the amount effectively paid by the participants, and the Manager must make the corresponding modifications in the internal regulations, placement prospectus, issuance deed, and subscription agreement for participation shares when applicable, observing for this purpose what is established in Article 15 of these Standards.

Placement of Shares
Art. 27.- Primary placement of shares may be carried out at the counter of the Manager or on an exchange.
In consideration of what is established in Article 64 of the Funds Law, in the case that the Manager is interested in carrying out primary placement with a commercial entity different from a Brokerage House, said entity must be previously authorized by the Superintendency in accordance with what is established with Article 26 of the Funds Law. In all cases, legal entities other than a Brokerage House interested in being authorized as a commercial entity must comply with the requirements established in Chapter II of the “Technical Standards for the Commercialization of Participation Shares of Open-End Investment Funds” (NDMC -10), approved by the Central Bank through its Norms Committee except for the computer system for the registration of contributions and redemptions.

Contributions in Real Estate
Art. 28.- In the case that the Manager establishes in the internal regulations of the Real Estate Development Fund that it may receive real estate goods as a contribution, said Manager must consider in its processes, in addition to what is established in Article 31 of these Standards, aspects such as the following:
a) That the contributor of the real estate presents a request for contribution of the real estate, indicating the price at which they wish to contribute it and a detailed description of it, as well as the tax clearance certificate of the owner of the real estate and any other complementary information of relevant character that explains the proposed value; (3) b) Verify that the real estate to be received is in accordance with the investment policy of the Real Estate Development Fund and that it is free of all encumbrances; c) Prior to the acceptance of the real estate good, the Manager must:
i. Verify the information presented by the contributor of the real estate, for purposes that what is disposed in the internal regulations of the Real Estate Development Fund is fulfilled; leaving for said purposes, record of the work performed; and
ii. Ensure that the real estate to be received as a contribution does not present problems that do not allow its inscription in the Registry of Real and Mortgage Property.
d) That the real estate good object of the contribution meets the conditions that have been fixed for this effect in the internal regulations of the Real Estate Development Fund; and e) For purposes of determining the value of the real estate, two appraisals must be carried out by two experts registered in the Registry of Appraiser Experts of the Superintendency. The costs of the real estate appraisals will be assumed by the contributor, prior to their realization. The Manager will take as reference the lower of the appraisals for the reception of the real estate as a contribution. The experts chosen by the Manager must have valid authorization according to the specialization established in the respective Standards for the appraisal of the type of real estate in question. It corresponds to the Board of Directors, the approval of the contribution of the real estate, proceeding the Manager to communicate to the contributor of the good, the value at which said real estate will be accepted and the number of shares to which its contribution would be equivalent. The real estates that the Fund receives in concept of contribution must be in accordance with its investment policy. Art. 29.- The Manager must specify in the internal regulations of the Real Estate Development Fund the possibility of accepting contributions of real estates made by persons related to the Manager, from other Funds administered by it, from Funds administered by Managers related to it, from companies of the same financial conglomerate or business group of the Manager. For this purpose, the Manager must comply with what is established in Article 28 of the Funds Law. In the case that the Real Estate Development Fund receives contributions in accordance with what is established in this article, it must reveal it in the essential information communication or material fact, indicating who has made the contribution. The real estates accepted as contributions must be in accordance with the investment policy of the Fund, according to what is established in Article 34 of these Standards.

Quality of Participant in Contributions of Real Estate Goods Art. 30.- Without prejudice to what is established in the “Technical Standards for the Authorization, Registration and Operation of Investment Funds” (NDMC -06), approved by the Central Bank through its Norms Committee, in cases of contribution of real estate goods, the quality of participant will be subordinated to having effected the inscription of the real estate in the name of the Manager, with clause “For the Investment Fund” followed by its name and preceded by the denomination of the Manager that administers it. Purchase of Real Estate Goods Art. 31.- For the purchase of real estate goods, the Manager must have the following information:
a) Two appraisals of the real estate good to be acquired, observing what is established in Articles 43, 44, and 45 of these Standards; b) Sources of financing for the purchase, when this is applicable; c) Contract of promise of sale-purchase in order to establish the conditions and terms under which it is expected the purchase will be finalized, when applicable; d) Certified extract of the real estate; and e) Tax clearance certificate of the Tax Administration and Municipal Clearance Certificate. Once the purchase of the real estate is finalized, the Manager in addition to the documentation listed in the first paragraph of this article, must process the final documentation associated with the purchase, having to count as minimum, with the following:
a) Copy of the tax clearance certificate of the Tax Administration and municipal clearance certificate that served as the basis for the sale-purchase deed; b) Sale-purchase deed of the real estate duly inscribed in the Registry of Real and Mortgage Property made in the name of the Manager, with the clause “For the Investment Fund” followed by its name and preceded by the denomination of the Manager that administers it; c) In the case that there will be financing for the purchase of the real estate, the mortgage loan contract associated with the purchase must be attached, which must clearly identify the amount granted, the interest rate, the maturity date, and the guarantees granted; d) Copy of the payment receipts associated with the purchase; and e) Insurance policy that provides coverage to the real estate. When a Real Estate Development Fund acquires real estate goods through financing, the real estate may remain mortgaged. Once the mortgage is cancelled, the Manager must make the pertinent management for the release of the same, documenting the actions performed and acting diligently. Once the mortgage is released, the Manager must perform the inscription referred to in letter b) of the second paragraph of this article, within thirty business days following its receipt. The Manager will take as reference, the lower of the appraisals performed for the purchase of the real estate; if among the appraisals performed there is a difference equal to or greater than twenty-five percent, the Manager must request a third appraisal. In all cases, the Manager must take as reference the lower of the appraisals performed. Both for the purchase and for the reception of contributions of real estate goods, the Manager must remit to the Superintendency a copy of the report of the appraisals performed on the real estates in a maximum term of five days after receiving said report. Age of Expertise for Acquisition or Sale of Real Estates Art. 32.- All appraisals performed by experts must have an age no greater than six months, prior to the date of acquisition of the real estate. Prevention and Control of Money Laundering and Due Diligence Art. 33.- The Manager must comply with the obligations established in the laws, instructions, and current regulations related to the prevention, detection, and control of money laundering, terrorism financing, and financing of the proliferation of weapons of mass destruction, for the operations it carries out through the purchase or contribution of real estates and in the sale thereof, as well as the due diligence it performs on future participants of the Fund, on appraiser experts, on tenants who rent the real estates owned by the Fund and in general on any operation or service it performs in its function as administrator of the Real Estate Development Fund. (4)

CHAPTER V
INVESTMENTS OF REAL ESTATE DEVELOPMENT FUNDS

Investments of Real Estate Development Funds
Art. 34.- The resources of Real Estate Development Funds, without prejudice to the amounts they maintain in cash, in deposit in checking account, savings account, or time deposit, must be invested according to their investment policy in:
a) Real estates located in El Salvador that generate income originating from their sale or lease; and b) Public offering securities, as established in Article 97 of the Funds Law, observing what is disposed in the “Technical Standards for the Investments of Investment Funds” (NDMC -07), approved by the Central Bank through its Norms Committee. The Manager may acquire architectural plans, designs, technical studies, and consulting for the development of the project. The real estates in which the Fund invests must be free of rights of usufruct, use, or habitation or any other encumbrance or other right that makes impossible its transfer to the Real Estate Development Fund or the development of the project. Lease of Real Estate Goods Art. 35.- What is established in the “Technical Standards for Closed-End Real Estate Investment Funds” (NDMC-17), approved by the Central Bank through its Norms Committee, will be applicable to Funds that exploit real estate goods in lease. Administration of Investments Art. 36.- The Manager will establish the main functions that must be fulfilled by the investment administrator of a Real Estate Development Fund, considering as minimum the following:
a) Carry out follow-up on the projects developed by the Real Estate Development Fund, considering for this purpose the reports of the Supervisor of the Work; b) Inform the progress of the project to the Board of Directors of the Manager every quarter; c) Verify compliance with the necessary contracts for the development of the project; d) Inform the Board of Directors of the Manager promptly about the breach of contractual clauses, with the purpose of initiating the corresponding procedures for breach; e) Form and keep updated the file for follow-up of the execution of the development of the project, which must be formed by the documents that substantiate the actions performed from the beginning until the final reception of the work; f) Manage the procedures for claims related to flaws or defects in the work, goods or services, functioning or quality of the goods; and g) Any other responsibility that grants the Manager related to the administration of the investment. The functions listed in this article will be performed by the investment administrator without prejudice to the obligations established in the “Technical Standards for the Investments of Investment Funds” (NDMC -07), approved by the Central Bank through its Norms Committee. For the fulfillment of its functions, an Investment Administrator of a Real Estate Development Fund must have knowledge and experience in the type of project that the Fund will develop and be authorized for it, in accordance with the “Technical Standards for the Authorization and Registration of Investment Administrators of Investment Funds” (NDMC-03), approved by the Central Bank through its Norms Committee. Indebtedness of the Real Estate Development Fund Art. 37.- The Fund cannot have debts, which added exceed twice its net asset value. These limits include repo operations, overdrafts for the payment of invoices, and financing for the acquisition of real estates. The internal regulations of the Fund must establish the percentage of indebtedness of the Fund, which cannot exceed the limit established in this article. Modifications to the percentage of indebtedness established in the internal regulations of the Fund require the approval of the assembly of participants as well as modifications to the prospectus. The assets of the Fund can only be encumbered to guarantee the payment of its own obligations, according to what is established in the internal regulations. Debts acquired by a Fund can only be collected against its assets. In the case of those activities that involve the granting of loans, the Manager must ensure that the indebtedness policies contemplated in the internal regulations of the Real Estate Development Fund it administers are being complied with. Investment Policy in Public Offering Securities Art. 38.- When a Real Estate Development Fund considers in its policy the investment in public offering securities, it must specify in what type of value it will invest the resources of the Real Estate
Development Fund, as well as the main characteristics of these based on terms and risks, indicating the maximum and minimum percentages. There must be a correspondence between the objective and investment policy, according to the Funds Law and comply with what is established in the “Technical Standards for the Investments of Investment Funds” (NDMC -07), approved by the Central Bank through its Norms Committee. Investments During the Subscription and Placement Period Art. 39.- During the period in which the Real Estate Development Fund does not reach the minimum net asset value and number of participants established in the Funds Law, the Manager in order to preserve its net asset value, must maintain monetary contributions in deposits of banks domiciled in El Salvador or invest them in high liquidity and low risk securities, in accordance with what is established in the “Technical Standards for the Investments of Investment Funds” (NDMC -07), approved by the Central Bank through its Norms Committee. Term for Compliance with Limits Art. 40.- To comply with investment limits, in the case that the Real Estate Development Fund invests in public offering securities, it must comply with what is established in the “Technical Standards for the Investments of Investment Funds” (NDMC-07), approved by the Central Bank through its Norms Committee. For the case of investments in real estates that the Fund carries out, according to what is established in letters a) and b) of Article 34 of these Standards, the Manager must comply with investment limits in a term that does not exceed ninety days from the moment the Fund reaches the minimum net asset value and number of participants. The Manager must observe the indebtedness limits starting from when it reaches the net asset value and number of minimum participants of the Fund referred to in Article 61 of the Funds Law. Excesses to Investment Limits Justified or Not Attributable to the Manager Art. 41.- Excesses to the investment limits defined in the investment policy of Real Estate Development Funds, whether they occur due to causes attributable or not attributable to the Manager, must be notified to the Superintendency within three business days following the occurrence of the event, attaching the plan for the reduction of the excess, indicating additionally the causes of them, the effects for the participants, and the activities that will be carried out to decrease said excesses. The Manager will have a term of up to ninety days counted from the date in which the excess occurred, to regularize the investments of the Fund to the percentages established in its internal regulations, when the values or instruments are of public offering, or one hundred eighty days, if the investment excess corresponds to real estate assets. The excesses to the investment limits due to causes not attributable to the Manager occur in the following cases:
a) Process of sale or liquidation of the real estate development project; b) Changes in market conditions of the real estate sector; c) Those occurring in the terms in which the Real Estate Development Fund reaches the minimum net asset value and number of participants, according to what is established in Article 61 of the Funds Law; and d) Those occurring due to the materialization of natural catastrophes. The terms may be extended for justified cause and when authorized by the Superintendency. The Manager cannot carry out new acquisitions of values from the entities or values involved in the excess, until its situation is regularized. Valuation of Investments in Public Offering Securities Art. 42.- When a Real Estate Fund, in accordance with its internal regulations, invests in public offering securities, they must be valued individually at reasonable value, according to what is established in the “Technical Standards for the Calculation of the Value of the Participation Share and Assignment of Participation Shares” (NDMC -11), approved by the Central Bank through its Norms Committee. Valuation of Real Estates Art. 43.- The valuation of the real estates in which the Real Estate Fund invests must be carried out in accordance with what is established in Article 96 of the Funds Law, the guidelines established in these Standards, and must be in accordance with what is disposed in the “Technical Standards for the Registration of Appraiser Experts and Their Professional Obligations” (NRP-27) and must include aspects necessary for the correct identification and location of the real estate good and indicate in a clear, precise, and justified manner all the assumptions that give foundation to the valuation. (2) The appraisals made by the experts must include the information and evaluation relative to restrictions of domain, destination, use, or exploitation, encumbrances, precautionary measures, lawsuits, or any circumstance that may affect the value and exploitation of the real estate good. The real estates that constitute the real estate development project must be valued each year, until its completion. The Manager must remit to the Superintendency a copy of the report of the appraisals performed on the real estates in a maximum term of five days after receiving said report. Criteria for the Appraisal of Real Estate Goods Art. 44.- The appraisal must include aspects necessary for the correct identification and location of the real estate good and indicate in a clear, precise, and justified manner all the assumptions that give foundation to the valuation.

The Manager must ensure that appraisals and reports prepared by experts adhere to the following principles:
a) Objectivity: the value of the real estate must be the result of objective, neutral, and data-based criteria, whose sources are reliable and verifiable; b) Independence: the appraisals and their respective reports must be prepared by professionals who have no interest in the outcome thereof; c) Transparency: the experts must disclose all limitations and possible sources of error, as well as the assumptions considered for the appraisals, if applicable; d) Professionalism: the determination of the real estate value must be based on the conclusions resulting from the analysis and study that a prudent and diligent expert would perform, aimed at seeking, obtaining, and evaluating all relevant available information, such that the determined value reflects the amounts that would reasonably be granted for its acquisition or received for its sale; and e) Integrity: the appraisals must contain all information that allows a third party to conclude the total value of the appraisals, without the need to resort to external sources. Additionally, it must be possible to verify all calculations that support the final and intermediate results.

Eligible Appraisers
Art. 45.- The experts selected by the Manager to perform appraisals of the real estate assets owned by the Real Estate Development Fund must be registered in the Register of Appraisers maintained by the Superintendency or registered in other entities whose registers are recognized by said Superintendency. Furthermore, they must hold a valid authorization in the corresponding specialization for the appraisal of the type of real estate in question. The Manager must have the necessary controls to guarantee that contracted experts have proven experience in the type of real estate to be appraised and that they maintain a relationship of independence from themselves, their Financial Conglomerate or Business Group, and the Funds they administer, in order to minimize the possible emergence of conflicts of interest. Contracted experts, at the time of performing appraisals, must comply with not being a director, administrator, or employee of the Manager or a participant in the Fund. Additionally, they must submit as an annex to the corresponding appraisal report, a sworn declaration of compliance with these requirements.

In the case where a company provides the real estate appraisal service, the foregoing applies to the personnel working in said company who provide the service to the Manager.

Age of the Appraisal for the Acquisition or Sale of Real Estate

Where:
VCt = Value of the share on day “t”.
PNt = Net asset value on day “t” to be considered for the share value calculation.
NCt = Number of shares subscribed and paid on day “t”.
The share value must reflect the adjustment for the revaluation of the real estate assets owned by the Fund, as well as that derived from the receipt of contributions of real estate duly registered in the Real Estate and Mortgage Registry in the name of the Manager, with the clause “For the Investment Fund” followed by the name of the same and preceded by the designation of the Manager administering the Fund. It is the Manager's responsibility to value the assets in which the Real Estate Development Fund invests, even if it has contracted the services of a price provider or appraisers. Likewise, the Manager is responsible for maintaining the valuations of the assets of the Real Estate Development Funds it administers in accordance with market conditions and what is established in Article 102 of the Funds Law.
CHAPTER VI
ADMINISTRATION OF REAL ESTATE DEVELOPMENT FUNDS

Functions and Attributes of the Manager
Art. 48.- The Manager that administers Real Estate Development Funds, in addition to its functions and attributes established in the Funds Law and applicable regulations, shall have the following functions and attributes:
a) Comply with the risk management of the Real Estate Development Fund, in accordance with applicable Standards, considering the risks of project development and at minimum the following:
i. Risk of casualty;
ii. Risks associated with project financing;
iii. Risks of construction failures;
iv. Risk in the estimation or contraction of demand;
v. Risks associated with the increase in costs in the development of the project;
vi. Risks associated with the established times or schedules for the development of the project;
vii. Risks associated with incompatibilities of the technical specifications established in the feasibility study in the development of the project;
viii. Legal risks derived from the non-compliance of contracts executed with third parties for the development of the project; and
ix. Other operational risks consistent with the nature of the project.
b) Maintain a register of contracts that the Manager has signed with third parties and of the permits for the development of the project; c) Keep a detailed record of the costs associated with the project carried out by the Real Estate Development Fund, as well as the associated documentation; d) Project construction work log; e) Relevant controls regarding the investment plan, which must include the disbursements associated with the development of the project, detailing variations, adjustments, payments, advances, and overpayments, with their justification, as well as their respective proofs; f) Have authorized plans, as well as their modifications if applicable; g) Register of permits obtained associated with the project; h) Develop policies for the Reception of the Work; i) Have a file for each of the real estate assets in which the Fund invests, accepts as a contribution, or makes available for sale or for lease. This must be constituted by the documentation required in Articles 28 and 31 of these Standards, establishing mechanisms for information safeguarding; j) Establish control mechanisms on the operations performed by the Fund regarding the real estate assets, in accordance with Annex No. 6 of these Standards; and k) Develop policies and procedures regarding: service contracts, controls on accounts receivable and payable, insurance contracting, administration of payments in concept of sales and pre-sales, contracting of appraisers, as well as the review and safeguarding of the respective reports. The Manager, for the control of investments in real estate that it carries out on behalf of each Fund, must maintain an updated register of investments in chronological order, as required in the “Technical Standards for the Authorization of Constitution, Start of Operations, Registration and Management of Operations of Fund Managers” (NDMC -02), approved by the Central Bank through its Standards Committee. The information referred to in letters b), c), d), e), f), g), and i) of this article must be updated at the time changes occur to them. Art. 49.- The Manager, for the control of sales or pre-sales carried out associated with the executed project, must maintain the documentation, register, or proof of the transaction containing the detailed information of the operation it performs, for which it must consider the following aspects:
a) Name or corporate name of the client; b) Type of real estate (housing, industry, commerce, restaurants, hotels, or others); c) Internal code of the real estate assigned by the Manager; d) Code of the real estate in accordance with the code assigned in the Real Estate and Mortgage Registry; e) Location of the real estate (the exact address of the real estate must be expressed); f) Exact dimensions of the real estate object of the transaction expressed in square meters; g) Type of transaction (indicate if it is a sale or advance of sale); h) Sale value of the real estate expressed in United States dollars; i) Amount of the transaction expressed in United States dollars; and j) Availability (indicate the percentage of sale of the project).

Protection of Real Estate
Art. 50.- To protect the real estate in which the Real Estate Development Fund invests, the Manager is responsible for contracting the insurance it deems necessary. To this end, the internal regulations must reveal the main policies and guidelines on insurance contracting, as well as follow up on the provision of services required for their good care and handling. In the contracting of insurance, it must consider at minimum the following:
a) That the insured amount covers the value of the real estate, which must be adjusted each time an appraisal is performed on said real estate or when significant remodeling or expansions are made to the real estate asset; (1) b) That the quality of the contracted insurance does not deteriorate, for which it must review the insurance policies annually; and c) That the contracted insurance covers at minimum catastrophic insurance, fires, and allied lines, of protection against risks for constructions in process, detailing the risks that such insurance does not cover. Organization Levels Art. 51.- The Manager must define in the internal regulations of the Real Estate Development Fund, the levels of the organization involved in the decision-making process for the purchase and sale of investments and the names of those responsible for the administration thereof.
CHAPTER VII
ON THE CONTRACTING FOR THE CONSTRUCTION OF THE PROJECT

Site Supervisor
Art. 52.- For the development of a project, the Manager must have a site supervisor, who must have no less than five years of experience in the performance of this function. The supervisor must have no affiliation with the Manager or the construction company of the project. The Site Supervisor's functions include, at minimum, the following:
a) Supervise and verify the execution of the project, in accordance with the construction plans and technical specifications as programmed and approved; b) Inform in writing the investment administrator of the Manager, the occurrence of significant events or any event of which he has knowledge in the performance of his functions, which presumes facts or circumstances that could put the development of the project at risk, the foregoing, within a period of no more than three business days after having knowledge of the fact; c) Prepare the “Project Work Progress Report” on a monthly basis, in accordance with the guidelines established in Annex No. 4 of these Standards. Said report must be sent to the Manager and published by it on its website monthly; and d) Prepare the Final Delivery Report of the project. The site supervisor must be a professional in Civil Engineering or Architecture, have experience in supervising projects similar to the moment of contracting labor with the Manager, the latter must request a sworn declaration of no affiliation, in accordance with the second paragraph of Article 45 of these Standards.

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-12/2018
NDMC-19
TECHNICAL STANDARDS FOR CLOSED-END REAL ESTATE DEVELOPMENT INVESTMENT FUNDS Approval: 21/11/2018 Validity: 10/12/2018 (1) Construction Company Art. 53.- Prior to contracting construction companies, the Manager must perform due diligence procedures on them. Additionally, it will verify that any construction company wishing to participate in the development of a Real Estate Development Fund project, has the following: (1) a) Organizational chart and curriculum vitae of the personnel involved in the construction project; (1) b) No less than five years of experience in construction projects similar to the one to be performed, as well as knowledge, technical capacity for the development of the project, and quality certifications if any, for which it must request a list of similar projects performed, including the name of the client and contact means; (1) c) Suitable personnel, installed capacity, machinery, and equipment available in conditions to perform the work or service to be provided; and (1) d) List of suppliers including letter of commitment from them stating that if the construction company is contracted, they will provide the services for which they have been considered. (1) The Manager must record that it verified that the contracted construction company complies with the requirements established in this article. (1) In the contracting of the construction company, the Manager must avoid establishing conditions more burdensome than those currently in the market, establishing within its internal controls, a procedure for the selection of the company. (1) Guarantees Required for the Contracting of the Construction Company Art. 54.- The Manager, prior to contracting and signing the respective contracts, will request from the contractors, that they present the necessary guarantees in accordance with the following: (1) a) Advance investment guarantee: that which is granted to guarantee that the advance is effectively applied to the initial allocation and execution of the project, which must be presented prior to disbursement by the Manager; (1) b) Contract compliance guarantee: that which is granted to ensure that the contractor complies with all clauses established in the contract and that the work, the good, or the contracted service is delivered and received to full satisfaction; (1) c) Good work guarantee: that which is granted to ensure that the contractor will respond for flaws and defects attributable to him during the period established in the contract. The validity period of the guarantee will be counted from the final reception of the work; (1) and d) Other guarantees that the Manager considers necessary to guarantee the completion of the project.

Art. 56.- In addition to the obligations established in the “Technical Standards for the Remission and Disclosure of Information of Investment Funds” (NDMC -13), approved by the Central Bank through its Standards Committee, regarding disclosing, remitting, and publishing on its website, the Manager must incorporate the information related to the Real Estate Development Funds referred to in this chapter.

Essential Information or Relevant Facts
Art. 57.- For the purposes of these Standards, in addition to what is established in the “Technical Standards for the Remission and Disclosure of Information of Investment Funds” (NDMC-13), approved by the Central Bank through its Standards Committee, examples of essential information or relevant facts about the Real Estate Development Funds administered by the Manager are all information related to the following aspects:
a) Designation by the Fund of appraisers for the appraisal of acquired, received as contribution, or developed real estate; b) Purchase, sale, or receipt as contribution of real estate assets; c) Start of the project or its stages, when applicable; d) Project Work Progress Report in accordance with what is established in Annex No. 4 of these Standards; e) Completion of the sale of the project; f) Fines, infractions, or legal contingencies derived from the development or execution of the project; and g) Any other information that could influence the valuation of the Fund's assets, the share value, and in general, any information that could influence the appreciation of a participant regarding the performance of the Fund.

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-12/2018
NDMC-19
TECHNICAL STANDARDS FOR CLOSED-END REAL ESTATE DEVELOPMENT INVESTMENT FUNDS Approval: 21/11/2018 Validity: 10/12/2018 The Manager is obligated to communicate any essential information or relevant fact to the Superintendency no later than the next business day that the fact occurs or is known to it. Statement of Account Art. 58.- The Manager, in the statement of account it remits to its participants in accordance with what is established in the “Technical Standards for the Remission and Disclosure of Information of Investment Funds” (NDMC -13), approved by the Central Bank through its Standards Committee, must additionally include as an annex, the identification of the project, name, location, and type of project, time elapsed and remaining for the completion of the project, and indicate the percentage of progress thereof and other information that the Manager considers pertinent to inform the participant. In the case of delays in the execution of the project, the reasons for the same must be detailed. Additionally, the statement of account must indicate that the participant can access the Manager's website to obtain updated information detailing the Internal Regulations, placement prospectus, work progress report, essential information or relevant facts, and other information that the Manager considers pertinent. Annual Report Art. 59.- The Manager will keep available to its participants on its website, an annual report that must contain at minimum the following information:
a) Identification of the Real Estate Development Fund and its Manager; b) Detail of the Board of Directors of the Manager and the Surveillance Committee; c) Economic-financial panorama and market perspectives; d) Structure of participants constituting the Fund; e) Information on the ordinary assembly or extraordinary assemblies of participants that have been held in the period; f) Risk management report; g) Zone or geographic zones towards which the Fund has oriented its investment; h) Sector towards which the Fund has oriented its investment, such as: agriculture, industry, transportation, electricity, commerce, services, among others; i) Detail of expenses incurred during the reported period; j) Performance obtained by the Fund during the last year; k) Funding sources for transactions performed by the Funds; l) Evolution of the Fund's net assets; m) Evolution of the value of participation shares and of prices in the stock exchange in which it trades; n) Composition of the Fund's portfolio by issuer, risk classification, type of currency, country, and real estate assets; o) Report indicating the amount invested in the development of the work; p) Risk factors of the Real Estate Development Fund;

q) Information on relevant events that occurred during the reported period; and r) Copy of the audited report and financial statements corresponding to the last fiscal year presented to the Superintendence.
The first report shall be published no later than during the quarter following the completion of the Fund's first year of operation. The same deadline shall apply to the publication of subsequent reports.

Art. 60.- The Manager, in relation to each Fund it administers and without prejudice to the obligations established in the "Technical Standards for the Submission and Disclosure of Investment Fund Information" (NDMC-13), approved by the Central Bank through its Standards Committee, shall submit the following information to the Superintendence:
a) The current value of the participation unit, the commissions and expenses of the Real Estate Development Fund expressed in terms of percentages or amounts, detailing the basis for their determination, on a daily basis; b) Facts or essential information regarding the Real Estate Development Funds it administers in accordance with the Fund Law and the "Technical Standards for the Submission and Disclosure of Investment Fund Information" (NDMC-13), approved by the Central Bank through its Standards Committee and in accordance with these Standards; c) The "Project Construction Progress Report," as established in Annex No. 4 of these Standards, on a monthly basis, which must be prepared by the construction supervisor. This report must be carried out until the completion of the project. This report must be submitted to the Superintendence and published on its website by the fifth business day following the date to which the information corresponds; (1) d) The "Project Sales Report," in accordance with Annex No. 5 of these Standards, on a monthly basis, which must be submitted by the fifth business day following the end of the month to which the information corresponds; and e) "Report on the Equity and Investments of the Real Estate Development Investment Fund," as established in Annex No. 6 of these Standards, on a monthly basis, which must be submitted and published on its website by the next business day following the end of the month to which the information corresponds.

Publicity
Art. 61.- The information disclosed by the Manager regarding Real Estate Development Funds, as well as any advertising conducted regarding them, whether physical or electronic, must not be false nor misleading to participants or investors. Such information must be clear, truthful, complete, timely, and consistent with the characteristics of the Fund indicated in its internal regulations and placement prospectus. The Manager or the commercializing entity may not guarantee the investment result

or returns to participants. Guaranteeing returns shall be understood as the offer made by the Manager or the commercializing entity to all or certain participants to obtain a specific gain on the invested capital, or to obtain a gain that fluctuates within a certain range, a minimum, or a maximum, or the offer to maintain the amount invested by the participant.

Technical details of information submission
Art. 62.- The Superintendence shall submit to the Manager, within a maximum period of ninety days following the effective date of these Standards, with a copy to the Central Bank, the technical details related to the submission of the information required in Article 60 of these Standards. The information requirements shall be limited to the collection of information as regulated in these Standards. The Manager must implement the necessary mechanisms for the submission of the aforementioned information within a maximum period of one hundred twenty days after receiving the communication cited in the previous paragraph, in accordance with the technical details submitted by the Superintendence. The Manager must submit the information detailed in Article 60 of these Standards, in accordance with the periodicity established in said article, electronically starting from the first business day following the commencement of the placement of the Fund's participation units.

Manager's Website
Art. 63.- As part of the information that the Manager will include on its website, the following additional information must be considered:
a) Orientation guides on the advantages and risks of investing in Real Estate Development Funds; b) Name of the project or projects in which the Fund is investing; c) Construction progress reports of the projects; d) Monthly, quarterly, and annual financial statements; e) Value of the participation unit and its nominal value, specifying the reference date of the valuation considered for the real estate development projects; f) Quarterly management reports of the Real Estate Development Fund; and g) Name of the companies or persons contracted for the development of the real estate development project. Likewise, when the Manager contracts services with Fund resources, whether with companies that are members of its financial conglomerate, business group, or with related persons, it must disclose on its website the name of the company providing the service, as well as disclose the type and degree of linkage.

CHAPTER IX
OTHER PROVISIONS AND VALIDITY

Information retention period
Art. 64.- The information and records of transactions carried out by participants, the companies contracted to provide services to the Fund, and the minute books, must be preserved in accordance with the period established in the Special Law for the Prevention of Money Laundering and the Commercial Code, respectively. (4)

Sanctions
Art. 65.- Non-compliance with the provisions contained in these Standards shall be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

Unforeseen Aspects
Art. 66.- Unforeseen aspects in regulatory matters in these Standards shall be resolved by the Central Bank through its Standards Committee.

Validity
Art. 67.- These Standards shall enter into force on December 10, two thousand eighteen.

MODIFICATIONS:
(1) Modifications to articles 50, 52, 53, 54, and 60 and to Annex No. 4 approved by the Central Bank through its Standards Committee, in Session No. CN-16/2019, dated September 25, two thousand nineteen, with effect from October 14, two thousand nineteen. (2) Modifications approved by the Central Bank of El Salvador through its Standards Committee, in Session No. CN-06/2021, dated May 6, two thousand twenty-one, with effect from May 24, two thousand twenty-one. (3) Modifications to articles 9, 12, 15, 18, 23, 25, 28, and incorporation of articles 12-A, 12-B, 15-A, 15-B, and 15-C, approved by the Central Bank through its Standards Committee, in Session CN-11/2021, on August 31, two thousand twenty-one, with effect from September 17, two thousand twenty-one. (4) Modifications to Consideration IX and to articles 3, 33, and 64, and addition of Consideration X, approved by the Central Bank through its Standards Committee, in Session CN-03/2026, on March 19, two thousand twenty-six, with effect from April 6, two thousand twenty-six.

Annex No. 1

FEASIBILITY STUDY OF THE REAL ESTATE DEVELOPMENT FUND PROJECT The feasibility study must contain as a minimum the following information:

Cover
a) Project identification (Name, location, and type of project); b) Date of preparation of the feasibility study; c) Name of the Real Estate Development Fund; d) Term of the Real Estate Development Fund; e) Include the following literal reasons:
i. "The Closed-End Real Estate Development Investment Fund (name) has been registered in the Public Stock Register of the Financial System Superintendence, which does not imply that it recommends the subscription of its units or expresses a favorable opinion on the profitability or quality of said instruments.";
ii. "The amounts of money received as contributions for a Closed-End Real Estate Development Investment Fund are investments at the risk and account of the investors, are not bank deposits, and do not have the guarantee of the Deposit Guarantee Institute."; and
iii. "A Closed-End Real Estate Development Investment Fund involves risks associated with the development of the project; if such risks materialize, they may affect the objective and may cause the loss of the investment."
f) Identification of the persons who carried out the project feasibility study.
Generalities of the construction project
a) Project identification: name, location, and type of project. If the project consists of different stages, each of these must be listed and what each consists of; b) Destination of the project such as: commerce, offices, industrial, hotels, restaurants, warehouses, health, residential, services, education, entertainment, tourism, or other; c) Indication of the stage in which it is located; d) Location of the project; e) Description of the project zone; f) Identification of the professionals assigned to the project:
i. Company or natural person responsible for preparing the design and plans of the project;
ii. Company responsible for the construction of the project, if applicable;
iii. Company or natural person responsible for carrying out the construction supervision, these functions will be developed by a company or natural person different from that detailed in roman ii of this literal; and
iv. Company responsible for executing the sale of the project.
g) For each of the companies listed in the previous literals, the following must be revealed: name of the legal representative, summary of the main works executed by the entities, and whether it has the corresponding permits for the execution of its operations. h) Indicate the type of relationships and responsibilities with the entities described in literal f);

Annex No. 1

i) The Manager must indicate the guidelines to establish prices for contracts, as well as variations, adjustments, payments, advances, and treatment of excess payments.
3. Market Studies
In this section, a summary of the following aspects must be included as a minimum:
a) Analysis of the project demand estimate; b) Analysis of the target market; c) Price and sensitivity analysis; d) Competition analysis; e) Guidelines for the commercialization and sale of the project; and f) Indications of the professionals, whether internal or external, to carry out the study.
4. Project Risks
Project Risk Factors, considering as a minimum:
a) Estimator nature of financial projections; b) Accident risk; c) Location risk; d) Financing risk; e) Risk of failures or delays in construction; f) Risks derived from obligations for equipment and complementary services in the project; and g) Other risks associated with the nature of the project. Likewise, it must indicate the main management mechanisms for them.
5. Technical Aspects
In this section, the following must be included as a minimum:
a) Descriptive memory of the project; b) Descriptive memory of the house, apartment, office, commercial premises, among others; c) Technical specifications of the project (materials, quality, labor, etc.); d) Project value table; e) Topographic survey of the land; f) Plan of the distribution of lots, when there are lots subdivided under the ownership of their owner; g) Architectural, structural, electrical, hydraulic, and any other design plans included in the works; h) Environmental impact study, when necessary; i) Soil study; and j) Construction permit resolution.

Legal Aspects
In this section, the following must be included:
a) Indication that the Development Fund has a promise of sale contract which must be enforceable prior to the placement of participation units, or if it will be delivered through the contribution of real estate to the Development Fund. In both cases, it must express the existence of the legal risk of non-compliance that it entails; b) Indication that the property or real estate where the project will be developed is free of usufruct rights, use or habitation, or any other condition that prevents its transfer to the Fund or its exploitation by the Development Fund; c) Indication of having the required construction permits for the start of the work. The permit will be in accordance with the project to be carried out and the jurisdiction where the project is developed; d) Cadastral sheet and copy of the extracted certification (National Registry Center) with an age not greater than 60 days from its issuance; and e) Report of the contracts signed, when applicable, or of the contracts pending to be signed. In this section, it must be indicated whether the Manager has signed or will sign bonds, insurance, and mechanisms to ensure compliance with the obligation, such as: good use of advance, contract compliance, good work guarantee, guarantee of good service, functioning and quality of goods, mechanisms or penalties for non-compliance, among others.

Annex No. 1

Financial Aspects
In this section, the following aspects must be included:
a) Technical budget of the project, including aspects such as: materials, labor, financial burden, indirect costs, advertising and commercialization expenses, etc.; b) Budget for houses, apartments, offices, commercial premises, among others, by materials, labor, and condensed; c) Offers and/or subcontracts considered in the budget; d) Work program; e) Work investment plan; f) Sales projections; g) Investment flow (when the project is developed in stages, this detail must be presented for each stage); h) Indication of the valuation of the real estate asset, which must have a valuation by an expert registered with the Superintendence or in another registry that it recognizes; i) Guidelines to establish the sources of financing, as well as the identification of the entity or entities participating in the financing of the project, indicating the amounts with their respective financing percentages, estimated terms, and general conditions of the credits; and j) Guidelines that will be used to make disbursements to contracted entities. In this section, the Manager must indicate the main internal controls to guarantee that the amounts given as construction progress in favor of the company carrying out the construction are effectively applied in the development of the project, as well as in provisioning, execution, or acquisition of goods in accordance with the technical specifications and approved plans.

Annex No. 2

MINIMUM CONTENT OF THE INTERNAL REGULATIONS OF CLOSED-END REAL ESTATE DEVELOPMENT FUNDS The internal regulation of each Real Estate Development Fund must contain as a minimum the following:

Cover, which must contain as a minimum:
a) Name of the Manager; b) Name of the Development Fund; c) Object of the Development Fund: indicate in a summarized and descriptive manner, the destination of the majority of the investments or use of the Fund's resources, additionally specifying the type of Fund based on its investment policy, as well as specifying if the Fund will be medium or long term; d) Type of investor to whom the Development Fund is directed, which must consider aspects such as investment horizon, liquidity needs, risk tolerance, knowledge, and previous experience in the securities market; e) Include the following literal reasons:
i. "The Closed-End Real Estate Development Investment Fund (name) has been registered in the Public Stock Register of the Financial System Superintendence, which does not imply that it recommends the subscription of its units or expresses a favorable opinion on the profitability or quality of said instruments";
ii. "The amounts of money received as contributions for a Closed-End Real Estate Development Investment Fund are investments at the risk and account of the investors, are not bank deposits, and do not have the guarantee of the Deposit Guarantee Institute."; and
iii. "A Closed-End Real Estate Development Investment Fund involves risks associated with the development of the project; if such risks materialize, they may affect the objective and may cause the loss of the investment."
f) Name of the commercializing entities including reference of authorization in the Superintendence; g) References of authorization of the registry entry of the Manager and of the Real Estate Development Fund in the Public Registry kept by the Financial System Superintendence; h) Date: indicate the month and year of preparation of the internal regulation or reference of its update; and i) Other information that the Manager considers important.
Declaration of truthfulness of the information contained in the internal regulation, which must be granted by the Legal Representative or Attorney-in-fact of the Manager in a notarial act.
Presentation of the internal regulation signed by the person authorized to do so.
Index and Glossary: include the index of the content, as well as a glossary in which the technical terms that form part of the internal regulation are defined.
Extract of the internal regulation, summary of the information detailed below:
a) Name of the Manager and relevant aspects of it; b) Name of the Development Fund;

Annex No. 2

c) Type of Fund, Fund amount, nominal amount, and number of participation units, maximum participation percentages of participants, and duration term; d) Investment policy of the resources, diversification of investments, maximum and minimum investment limits, liquidity of its assets, debt policy, treatment of investment excesses; investment valuation policy; e) Sector or economic sectors, geographic zones towards which the Fund will orient its investment; f) Geographic location of the project, establishing the exact address of the development project; g) Description of the project to be carried out; h) Commissions to be charged by the Manager, indicating if they are charged to the Development Fund or to the investor, expressed as percentages or amounts; i) Information to be delivered to participants; j) Supervisory Committee: specify its functions and attributes; k) Procedure for the increase and decrease of the Development Fund's equity; l) Participants' Assembly: include the mechanism to carry out the call to participants for the assembly; m) Customer service procedure; n) Causes that originate the right to withdrawal of the participant; o) Liquidation policy of the Fund upon expiration of the term; and p) Other information that the Manager considers important.
6) General Aspects of the Fund:
a) Expression "Closed-End Real Estate Development Investment Fund", followed by a name or designation that individualizes it from any other Fund authorized by the Superintendence; b) Type of investor to whom the Development Fund is directed; c) Duration term of the Real Estate Development Fund; d) Process for the contribution of real estate to the Fund, if applicable; e) Amount of the Real Estate Development Fund; f) Manager's guarantee based on the equity of the Real Estate Development Fund, in accordance with article 23 of the Fund Law; g) Commissions to be charged by the Manager, indicating their periodicity, the basis for the determination of their calculation, and if they are charged to the Real Estate Development Fund or to the investor, must be expressed as percentages or amounts; h) Expenses that will be charged to the Real Estate Development Fund, clearly detailing their concepts, expressed as percentages or amounts; i) Applicable tax regime for the Real Estate Development Fund and for participants; and j) Specify the place or places where documents or evaluations related to the Development Fund will be available to participants.

General Aspects of the Manager:
a) Name, domicile, and business group or conglomerate to which the Manager belongs, as well as data indicating its authorization in the Registry; b) Specify the body authorized to agree on the modification of the internal regulations; and c) Obligations of the Manager.
Information on the issuance and placement of shares:
a) Characteristics of the Fund's share issuance and their nominal value, detailing if there is more than one issuance; b) Minimum investment amount or number of shares, if applicable; c) Method of payment for the placement of participation shares; d) Initial value of the share and the procedure for calculating the share value; e) Maximum participation percentages of participants in the Development Fund; f) Procedure for the placement of shares; g) Terms, conditions, and deadlines in the event of voluntary and partial capital reductions; and h) Specify the causes that give rise to the participant's right to withdraw.
Construction project:
a) Description of the real estate development project, detailing its stages, where applicable; b) Geographic location of the project; c) Period in which the construction project is estimated to be developed and the project schedule; d) Descriptive information on the technical, marketing, legal, financial aspects, and cash flow of the project; e) Indicate that it has valid authorizations or permits, establishing a list of the same; and f) Mechanisms foreseen for the commercialization and sale of the project.
Policies related to the functioning of the Development Fund:
a) Investment policy of the resources and diversification of investments, detailing:
i. Characteristics of the assets in which the Real Estate Development Fund will invest, describing the types, terms, and hedging policies, if any;
ii. Detail the treatment of investment excesses;
iii. Zone or zones geographically towards which the investment will be oriented;
iv. Characteristic of the investment, indicating if it is medium or long term; and
v. Investment limits, specifying the minimum and maximum percentages of concentration in the following: type of property, specification of the geographic zones in which investment will be made, zone or zones geographically of the location of the properties and properties acquired from related parties.
b) Valuation policy of the investments of the Real Estate Development Fund:
i. Method of valuation for public offering investments and for properties; and
ii. Frequency of valuation of the investments.

c) Liquidity policy of the assets of the Real Estate Development Fund, for the purpose of having the necessary resources to comply with its operations; d) Debt policies in relation to the Fund's equity, indicating whether the Fund contemplates incurring debts; e) Policy on capital increase through the issuance of participation shares, specifying the procedure and maximum deadline for participants to exercise the preemptive subscription right; f) Policy on capital reduction, specifying information to opt for the reduction, the form and conditions, deadlines, payment dates, and methodology for calculating the payment value of the participation shares; g) Policies on the contracting of insurance, indicating:
i. Guidelines regarding the assets to be insured;
ii. Type of coverages to be contracted at a minimum; and
iii. Criteria for the selection of insurance companies.
h) Guarantee policies for the fulfillment of obligations of professionals or companies for the Real Estate Development Fund; i) Policy for the distribution of benefits obtained by the Real Estate Development Fund; and j) Procedure and policy for the contribution of properties.

Other management policies adopted:
a) Policies on the operations of the Real Estate Development Fund with related parties, the handling of conflicts of interest, and assignment of operations when different Investment Funds are managed; and b) Policies, measures, and procedures whose object is the adequate resolution of conflicts of interest between the Development Fund and its Manager, such as: investments and operations with related parties, operations between Investment Funds, and operations between the Development Fund and its Manager.
Controls and procedures:
a) Procedure for the acquisition of securities; b) Procedures, deadlines, and other rules for the Manager's attention to participants regarding: Queries made, attention and resolution of complaints, claims. The means of receipt of the same must be specified, address of the office, telephone, email address in which the participant can make queries, complaints, and claims; c) Procedure for resolving differences or conflicts between participants, or between them and the Manager; d) Procedures to carry out the modification of the internal regulations; and e) Administration and liquidation rules of the Real Estate Development Fund:
i. Procedure and deadline for liquidation;
ii. Date on which the sale of properties will begin;
iii. Mechanisms for diversifying cash in bank accounts, received from the sale of properties;
iv. Process for the payment of participation shares;
v. Valuation for the payment of participation shares; and
vi. Maximum percentage of fees regarding the Fund's assets that would correspond to the liquidator, when applicable.
Custody system of the assets of the Real Estate Development Fund: detail the custody system for the securities that make up its assets.
Business Plan of the Real Estate Development Fund.
Definition of the levels of the organization involved in the decision-making for the purchase and sale of investments.
Criteria for the selection and renewal of professionals:
a) External auditor and fiscal auditor, if applicable; b) Appraisers; c) Other professionals; and d) Indication that the Fund has a risk classification, specifying the name of the risk rating agency.
Surveillance Committee:
a) Powers, duties, and responsibilities of the Surveillance Committee; b) Frequency of meetings; and c) Remuneration of the Surveillance Committee, if applicable.
Causes that give rise to the right to withdraw: specify the circumstances that generate that the participant exercises the right to withdraw from the Development Fund, including the deadline and mechanism by which the participant can exercise the right.
Applicable tax regime for the Fund.
Participants' Assembly: matters that will correspond to the knowledge of the extraordinary participants' assembly, in addition to those established in the Law. The mechanism to carry out the summons to them must be included.
Rights, obligations, and communication for the participant:
a) Specify the rights and obligations of the participant: rights in the Real Estate Development Fund, mandatory information to be delivered to participants in addition to that established in the Funds Law, detailing said information and its frequency; b) Participant's obligation to keep the Manager informed about possible changes of domicile, among others; c) Detail of the information to be delivered to the participant at all times, including its frequency; d) Mechanisms to inform participants about relevant events that affect their investment; e) Name of the printed or electronic newspaper of national circulation in which publications will be made; f) Form and frequency with which the Manager must inform about the ownership of shares of entities in which the Real Estate Development Fund is temporarily a controller; and g) Manager's website.
General criteria for the contracting of professionals, the reporting on their performance, as well as the management of potential conflicts of interest.
Projected information on the cash flows that the project will generate, the financial position statement, and the comprehensive income statement of the Financial Development Fund, for a period covering the period in which the Fund is estimated to be in operation, and include sensitivity scenarios. Likewise, it must include the assumptions that support the projections, and include the necessary warning legends regarding that these projections do not imply the offering of a guaranteed return for the investor who acquires participation shares of the Real Estate Development Fund.
Possible situations that could affect the estimated behavior of the expected cash flows of the project, its risks, the respective management, and any limitation that exists for the use of the assets that form part of the Real Estate Development Fund.
Information on the valuation of the assets acquired and liabilities assumed that constitute the project to be acquired by the Real Estate Development Fund, if project activities have been carried out previously. The valuation must include the description of the methodology used and must detail the liens and annotations weighing on the properties.
Financing sources to which the Real Estate Development Fund could resort in case the investment plan and the project's financing structure are not fully complied with, as well as the general conditions that credit operations formalized for the project must meet.
Mechanisms foreseen for the total or partial commercialization and sale of the project.
Description of the risks and implications for investors if the project is not realized, as well as the specific risks related to the assets, liabilities, and contracts indispensable for the project during its development.
Method of calculation used for the projections of the income expected to be obtained from the sale of the properties owned by the Real Estate Development Fund at the end of the construction project.
Possible situations that could affect the behavior of the projections made, their risks, and the respective management of the same.

MINIMUM CONTENT OF THE OFFERING PROSPECTUS FOR PARTICIPATION SHARES OF REAL ESTATE DEVELOPMENT INVESTMENT FUNDS

The offering prospectus for participation shares for Real Estate Development Funds must contain, in cases applicable according to the Closed-End Investment Fund classification, at least the following information:

Cover, which must contain at least the following:
a) Name of the Manager; b) Name of the Real Estate Development Fund; c) Object of the Real Estate Development Fund: Description of the project to be developed; d) Type of investor to whom the Real Estate Development Fund is directed, which must consider aspects such as investment horizon, liquidity needs, risk tolerance, knowledge, and prior experience in the securities market; e) Main characteristics of the Real Estate Development Fund issuance; f) Consign the following literal reasons:
i. "The Closed-End Real Estate Development Investment Fund (name) has been registered in the Public Stock Registry of the Superintendence of the Financial System, which does not imply that it recommends the subscription of its shares, opines favorably on the profitability or quality of said instruments";
ii. "The amounts of money received as contributions for a Closed-End Real Estate Development Investment Fund are investments at the account and risk of the investors, they are not bank deposits and do not have the guarantee of the Deposit Guarantee Institute"; and
iii. "A Closed-End Real Estate Development Investment Fund involves risks associated with the development of the project, in case such risks materialize, they can affect the objective and can cause the loss of the investment".
g) Name of the House through which the Manager will carry out the placement on the Stock Exchange; h) Risk classification granted; i) References of authorizations for registration in the respective stock exchange and authorization of registry entry in the Public Registry kept by the Superintendence of the Financial System, of the Manager and of the share issuance; and j) Date: Indicate the month and year of preparation of the prospectus or reference of its update.
Back cover, which must contain the following information of the Manager: House, External Auditors, legal advisors, and any other natural or legal person who has intervened in the constitution and placement of the participation share issuance: Name, address, website, telephone, fax, email of the person designated as contact.
Declaration of truthfulness of the information contained in the prospectus, which must be granted by the Legal Representative or Attorney-in-fact of the Manager in a notarial deed.
Presentation of the prospectus signed by the Legal Representative of the Manager, acting in their capacity as administrator of the Real Estate Development Fund.
Index.
Extract of the offering prospectus: Include a summary of the information detailed below:
a) Name of the Manager and relevant aspects thereof; b) Duration term of the Fund; c) Name of the Real Estate Development Fund; d) Name of the House that will carry out the stock placement; e) Description of the real estate development project; f) Geographic location of the project; g) Description of the legal and economic consequences of not achieving the realization of the project as estimated; h) Investment policy, treatment of investment excess, and debt policy; i) Description of commissions and expenses; j) Maximum participation percentage of participants in the Real Estate Development Fund; k) Causes that give rise to the right of withdrawal from the Real Estate Development Fund; l) Liquidation process of the Fund upon expiration of the duration term; m) Potential risks to which the Real Estate Development Fund is exposed; n) Information to be delivered and sent to participants; and o) Other information that the Manager considers important.
Authorizations of the Real Estate Development Fund:
a) Date and session of the competent authority of the Manager that authorized the internal regulations and offering prospectus of the Real Estate Development Fund; and b) Date and session of authorization of the registry entry of the Real Estate Development Fund in the Superintendence of the Financial System.
Characteristics of the Real Estate Development Fund issuance, which must contain at least:
a) Name of the Manager and the Real Estate Development Fund; b) Type of Fund: indicate Real Estate Development Fund and express the name of the Fund; c) Type of investor to whom the Real Estate Development Fund is directed, which must consider aspects such as: investment horizon, risk tolerance, knowledge, and prior experience in the securities market; d) Name of the issuance; e) Nature and class of security; f) Amount of the issuance and number of participation shares; g) Minimum amount and multiples for contracting electronic book-entry securities in account; h) Placement price of the participation shares, including the method of daily update of the placement price during the subscription period; i) Trading currency; j) Guarantees: specify that the Manager has constituted a guarantee for the Real Estate Development Fund, establishing the events or causes covered by it. Additionally, the name of the entity designated as the representative of the beneficiaries must be detailed; k) Form of representation: by electronic book-entry securities in account; l) Transfer of securities: express that the transfers of the securities represented by book-entry securities will be effected through accounting transfer; m) Redemption of securities: detail the conditions under which the securities will be redeemed, if applicable; n) Term of the issuance; o) Negotiability in the corresponding stock exchange; p) Method of daily update of the placement price during the subscription period; q) Assets in which the resources contributed during the subscription period will be invested; r) Description of the investment and diversification policy of the Real Estate Development Fund, detailing the types of assets in which they will invest, treatment of investment excess, investment projects, and other background information that allows knowing the risks and potential returns of the Real Estate Development Fund; s) Financing sources to which the Investment Fund could resort in case the proposed investment plan is not fulfilled, as well as the general conditions that credit operations formalized for the project must meet; t) Description of the Fund's benefit distribution policy, specifying the calculation method, as well as the deadline, place, means of informing, and mode established to exercise the right to receive them; u) Description of the policy on capital increases and decreases; v) Description of the debt policy; w) Modification to the characteristics of the issuance, clearly signaling the procedure to be followed to request approval of modifications, specifying the internal and external bodies authorized for its approval; x) Custody and deposit, detail when applicable, that the issuance will be deposited in the electronic records kept by the specialized society in the deposit and custody of securities contracted; y) Risk classification of the issuance, name of the risk rating agency, the meaning of the assigned classification, and the reference date of the
classification report; z) Conditions under which an issuance will be considered defaulted; and aa) Procedure to be followed in case of judicial action against the Real Estate Development Fund.
Real estate development project:
a) Description of the real estate development project in which its stages must be detailed, where applicable; b) Geographic location of the project; c) Period in which the construction is estimated to be developed; d) Estimated projections of the project; e) Descriptive information on the technical, marketing, legal, and financial aspects of the project; f) Projected information on the project's cash flows, the financial position, and the comprehensive income statement of the Real Estate Development Fund. Likewise, it must include the assumptions that support the projections; g) Information on the valuation of assets to be acquired and liabilities assumed that constitute the project. The valuation must include the description of the methodology used and must detail the liens and annotations weighing on those properties, said valuation must be carried out by an appraiser registered in the Superintendence; h) Indicate that it has authorizations or permits, specify a detail of the same; and i) Mechanisms foreseen for the commercialization and sale of the Real Estate Development Fund Project.
Causes that give rise to the right to withdraw: specify the circumstances that will generate that the participant exercises the right to withdraw from the Real Estate Development Fund, including the deadline and mechanism by which the participant can do so.
Name of the House participating in the placement.
Information on the Manager:
a) Corporate name, Tax Identification Number (TIN), numbers and date of registration in the Registry, address of the main office, telephone and fax numbers, email, internet site address; b) Detail of the shareholders, whether natural or legal persons; including the percentage of participation; c) List of the Board of Directors with their registration data in the Commerce Registry, General Manager or Executive Director of the Manager, the main executives, and the persons who will be in charge of functions related to investment decisions in the Real Estate Development Fund, incorporating a summary of their curriculum vitae; d) Relevant information (including lawsuits promoted against them and condemning judgments for payment); and e) In case the Manager belongs to a business group or conglomerate, it must include the controlling company of the Manager, the names of the companies, as well as a brief description of the business group and the position of the Manager within it.
Financial information: audited financial information of the Fund, when it concerns subsequent issuances.
Risk Classification: attach the complete risk classification report of the issuance.
Register of participants: specify the name of the entity responsible for keeping the referred register.

Fund Risk Factors: identify and explain the main risks inherent to the Fund and its investments, considering within these risks at minimum the following:
a) Insurance risk; b) Risks associated with project financing; c) Construction failure risks; d) Risk in demand estimation or contraction; e) Risks associated with cost increases in the development of the project; f) Risks associated with established times or schedules for the development of the project; g) Risks associated with incompatibilities of the technical specifications established in the feasibility study in the development of the project; and h) Legal risks derived from non-compliance with contracts entered into with third parties for the development of the project.
Other operational risks appropriate to the nature of the project.
Manager's practices and policies regarding risk management in the management of the Real Estate Development Fund.
Procedure to be followed in case of legal action against the Manager.
Commissions: description of commissions charged indicating their frequency, the basis for determining their calculation, and whether they are borne by the Real Estate Development Fund or the investor, must be expressed as percentages or amounts.
Treatment of contributions with real estate, if applicable:
a) Conditions and requirements for receiving contributions; and b) Conditions and limitations for the transfer of shares of contributors, as well as of the contributed real estate.
Expenses that will be charged to the Real Estate Development Fund, clearly detailing their concepts and shall be expressed as percentages or amounts.
Taxes: clear description of the tax regime applicable to the Real Estate Development Fund and the participant.
Information to participants:
a) Summary of the information that must be mandatorily delivered to participants of the Real Estate Development Fund specifying its frequency; b) Frequency and method for providing financial reports to participants; c) Detail of the main rights of participants; d) Inform the future participant of the consequences in case the Fund's equity is not reached; e) Locations to obtain information on the Financial Statements of the Manager and the Real Estate Development Fund; and f) Inform that the quality of participant is lost when all the shares held by them in the Fund are traded on an exchange and accounting transfers have been made in accordance with the Law on Electronic Book Entries of Securities.
Any other information that the Manager considers important to make known to the investing public.

PROJECT CONSTRUCTION PROGRESS REPORT OF THE REAL ESTATE DEVELOPMENT INVESTMENT FUND

Monthly Report of the Real Estate Development Fund “Indicate the name of the Real Estate Development Fund” (1) (Indicate the reported period)

General Information
a) Project identification: name, location, and type of project. If the project consists of different stages, list each of these; b) Project destination; and c) Indication of the stage in which it is located, such as: design, construction, etc.
Contractual Information
a) Identification of professionals assigned to the project:
i. Entity or persons responsible for carrying out construction supervision and who have under their responsibility that the work is carried out in conformity with the formulation of the project;
ii. Entity responsible for elaborating the design and plans of the project;
iii. Entity responsible for the construction of the project; and
iv. Entity responsible for executing the placement or sale of the project.
b) Guarantees associated with the development of the project:
| Type of Insurance | Type of Guarantee | Entity or Insurer that issued the guarantee | Amount | Validity | Start Date | End Date |
Information on Construction Progress
a) Time elapsed and remaining:
i. Original project deadline;
ii. Extension deadline, if any;
iii. Time elapsed;
iv. Time remaining; and
v. Project progress (Expressed as a percentage of the project budget).
In the event of discrepancies in the execution of the project, the reasons for the same, reprogramming, or mechanisms to resolve the discrepancy must be detailed.

Work Program:
Indicate the works executed in the reported period, detailing the duration, percentage of progress, and their comparison with what was projected, establishing if there has been advancement or delay in the work. The difference in the level of execution between what was programmed and the executed progress must be established.
Personnel, materials, equipment, and tools used in the period:

Field Personnel
| No. | Specialty | Quantity |

Materials, Equipment, and Tools
| No. | Materials (description of the type of material) | Quantity |

Work Budget:
Summary of the economic movements of the project, indicating payments in concept of work progress, accumulated payment, and the total of the contract.
Supervisor Activities:
The main activities of the supervisor must be indicated, and it must be indicated if there have been deficiencies or recommendations in the development of the project.
Indication if there have been fines, infractions, or legal contingencies derived from the development or execution of the project, as well as their respective amounts or proofs of the materials.
Inspections or audits.
Logs of the period.
Report on the management of the main risks associated with the project.
Appendices:
Photographic illustrations of the construction progress and the work program during the period must be attached.

REAL ESTATE DEVELOPMENT INVESTMENT FUNDS
PROJECT SALES REPORT

It will correspond to the Manager to indicate the characteristics for each real estate unit, in accordance with the following:

Field	Description
Name of the real estate unit	Indicate the name of the real estate unit.
Internal code of the real estate unit assigned by the Manager	Indicate the code assigned by the Manager.
Code of the real estate unit in the Registry	Indicate the code assigned by the Land and Mortgage Registry.
Sale date	Indicate the sale date of the real estate unit.
Type of sale	Total or partial.
Name of the company selling the real estate unit	Indicate the name of the company responsible for selling the real estate unit.
Name of the buyer	Indicate the name of the natural or legal person who acquired the real estate unit.
Sale value of the real estate unit	Indicate the value in which the real estate unit was sold.
Value of the real estate unit	Indicate the value of the real estate unit according to the appraisal performed.
Dimensions of the real estate unit	Area: Indicate the built area in square meters. Parking and common areas: Indicate generalities regarding parking and common areas.
Full name of the appraiser	Indicate the name of the person (natural or legal).
Valuation date	Indicate date of realization.

NET ASSET AND INVESTMENT REPORT OF THE REAL ESTATE DEVELOPMENT INVESTMENT FUND

No.	Name	Description
1	Report Date	Establish the date on which the information was published.
	Information Date	Specify the reference month of the information.
	Manager Name	Name of the Manager.
	Fund Name	Name of the Investment Fund.
	Custodian	Detail the name of the entity in which the values acquired with the resources of the Fund are deposited.
	Object and Classification of Fund based on its investment policy	Establish the object and classification of the Fund based on its investment policy with reference to its placement prospectus.
	Start of Operations Date	Indication of the start of operations date of the Fund.
	Fund Net Asset Value	Indicate the value of the Fund's net assets, expressed in United States Dollars.
	Number of Participation Shares of the Investment Fund	Indicate the number of participation shares.
10	Number of Participants in the Fund	Indicate the number of participants constituting the Investment Fund.
	Share Value	The share value must be indicated.
	Nominal Value	Indicate the nominal value of the participation share.
	Market Price of the Participation Share	Indicate the market price of the participation share of the stock exchange on which it is registered for trading.
	Evolution of Share Value	Indicate the evolution of the share value over the last six months.
	Return on Participation Share	Indicate the return of the shares over the last six months. This calculation will be carried out through the moving average of discrete daily returns of the last six months applying annualization through a compound interest scheme. Considering eight decimals for its calculation and four decimals for its disclosure.
16	Fund Risk	Value at Risk (VaR) indicator.

NET ASSET AND INVESTMENT REPORT OF THE REAL ESTATE DEVELOPMENT INVESTMENT FUND

No.	Name	Description
17	Commissions	Indicate the commissions to be charged by the Manager, indicating their frequency, the basis for determining their calculation, and whether they are borne by the Fund or the investor, must be expressed as percentages or amounts, in accordance with the internal regulations of the Fund.
18	Expenses	Indicate the expenses that will be borne by the Fund, clearly detailing their concepts and shall be expressed as percentages or amounts according to what is defined in the internal regulations of the Fund.
	Risk Classification	Classification granted to the Fund by a rating agency, specifying the reference date of the risk classification report.
20	Investment Policy	Summary of the objectives and investment policies of the Investment Fund.
	Composition of the Investment Fund
	a) Portfolio composition by type of investment:	1. Deposits (include savings accounts, checking accounts, and time deposits);<br>2. Fixed income (debt);<br>3. Variable income (shares);<br>4. National Open-End Investment Funds;<br>5. National Closed-End Investment Funds;<br>6. Securitization values;<br>7. Foreign securities;<br>8. Foreign Investment Funds (include ETFs);<br>9. Repos; and<br>10. Real Estate
	b) Portfolio composition by sector:	1. Agriculture, livestock, forestry, and fishing;<br>2. Manufacturing industry;<br>3. Electricity, gas, and water;<br>4. Construction;<br>5. Commerce, restaurants, and hotels;<br>6. Transportation, storage, and communications;<br>7. Financial and insurance activities;<br>8. Other sectors.
	c) Portfolio composition by investment properties:	1. Concentration of the investment portfolio considering:<br>i. Type of real estate: Indicate if it is urban or rural;<br>ii. Geographic location: Indicate the geographic distribution of the Fund's investment properties; and<br>iii. Economic sector: Indicate the economic activities in which real estate development projects are included: housing, industry, commerce, restaurants and hotels, services, banks, insurance, and other financial institutions, Government services, etc.<br>2. Sales levels: Indicate the percentage of project sales;<br>3. Tenants: Indicate the level of leasing that tenants have over the Fund's investment properties, when applicable;<br>4. Income from real estate: Detail the real estate with the weighting in percentage on the total portfolio detailing its variation from last month; and<br>5. Occupancy levels: Indicate the occupancy level that the real estate owned by the Fund has on the report date, when the Fund has real estate for leasing.
	d) Portfolio composition by issuer, indicating the ten main issuers of assets;
	e) Maturity information of the investment: 0-180 days; 181-365 days; 1 to 3 years; 3 to 5 years; more than 5 years;
	f) Portfolio composition by risk classification;

NET ASSET AND INVESTMENT REPORT OF THE REAL ESTATE DEVELOPMENT INVESTMENT FUND

No.	Name	Description
	g) Portfolio composition by currency type; and
	h) Portfolio composition by country of origin of the issuer.
22	Amount by Instrument Type	Specify the amount by instrument type and by investment properties detailed in item 21.
23	Participation Percentage	Corresponds to the participation percentages of assets that constitute the Fund's investment portfolio by instrument type and investment properties.
24	Contact Information	Specify place and person designated to handle inquiries about the Fund's information.

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