The Financial Regulatory Authority (FRA) has amended requirements for real estate investment and development companies seeking to convert into real estate investment funds, easing some financial conditions while introducing limits on borrowing.
The FRA board, chaired by Islam Azzam, amended rules issued under Decision No. 179 of 2025 to better reflect the business model and contractual obligations of real estate developers.
Under the new rules, companies seeking conversion must have net shareholders’ equity of at least LE500 million, based on their latest approved financial statements. The previous rules required net equity to account for at least 40% of total assets and investments, while also setting a minimum of LE500 million.
Net equity will be calculated after excluding any gains resulting from asset revaluations. The remaining amount must be used to subscribe to the fund’s investment certificates following the conversion.
The FRA also introduced a borrowing condition requiring loans recorded in a company’s latest approved financial statements to remain within the borrowing ceiling permitted for real estate investment funds under the executive regulations of the Capital Market Law.
The current ceiling is 60% of the fund’s net asset value. The requirement for companies to have issued and paid-up capital of at least LE5 million, or its equivalent in foreign currencies, remains unchanged.
Azzam said that experience with the previous rules showed that calculating net equity as a percentage of total assets and investments did not adequately reflect the nature of real estate development. Developers often carry significant liabilities related to construction and property delivery against advance payments received from customers.
These operational obligations must be disclosed in the fund’s information memorandum when its investment certificates are offered for subscription or listed on the stock exchange.
The FRA said the amendments are intended to make the conversion framework more suitable for real estate developers while maintaining borrowing limits and financial safeguards.
The decision is expected to be published in the Egyptian Gazette and on the FRA’s website in the coming days.
