French Monetary and Financial Code
In forceExpansion or reconstruction work and sales of property assets by non-trading property investment companies must comply with the following conditions:
1° In the case of extensions :
The cost, including all taxes, of expansion work on a built property, carried out during a twelve-month financial year, must not exceed 15% of the market value of the property assets of the non-trading property investment company as shown in the balance sheet for the last financial year for which the accounts have been closed. The total amount of work carried out, including improvement work carried out in connection with the extension of the same property, is taken into account when calculating this percentage. If the extension work is not carried out in the same financial year, the aforementioned 15% limit may be combined with that for the following financial year only;
2° In the case of reconstruction work :
The cost, including all taxes, of reconstruction work carried out during a twelve-month financial year must not exceed 15% of the market value of the property assets of the non-trading property investment company as shown in the balance sheet for the last financial year for which the accounts have been closed. The total amount of work, including improvements and extensions, carried out in connection with the reconstruction of the same property is taken into account when calculating this percentage. If the reconstruction work is not carried out in the same financial year, the 15% limit may be combined with that for the following financial year only.
Compliance with the 15% limit is not required when the total or partial reconstruction of the building is made necessary by force majeure or when the work is required by the regulations in force;
3° For disposals of real estate assets:
a) The non-trading property investment company has owned the property sold for at least five years on the date of sale;
b) The cumulative value of the properties sold during a twelve-month period must not exceed 15% of the market value of the property assets of the non-trading property investment company as shown in the balance sheet for the last financial year for which the accounts have been closed. If no disposals are made during a financial year, or during two successive financial years, this limit may be carried forward and accumulated with that of the following financial year, up to a limit of three financial years;
c) The limit stipulated in b does not apply to disposals made during the three years preceding the end of the period stipulated in the articles of association of the non-trading property investment company, provided that this period is not subsequently extended and that no new property investment is made with the proceeds of the disposals made;
d) The real estate investment trust may dispose of real estate assets during a twelve-month financial year without complying with the time limit stipulated in a), up to a cumulative value of 2% of the market value of the real estate assets of the real estate investment trust as shown in the balance sheet for the last financial year for which the financial year has ended;
e) The time limit set in a does not apply when the disposal concerns a property held by a company referred to in II of article R. 214-156 or when units, shares or rights in non-trading property investment companies and bodies referred to in 3° of I of article L. 214-115 are disposed of.
