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CS Professional · Strategic Management and Corporate Finance · Real Estate Investment Trusts

Sagar Prime REIT bought a completed mall two years ago and now wants to sell it. Which position is correct under the REIT investment conditions?

The mall was held for only two years, so the sale falls short of the three-year holding expectation. It can proceed only if unitholders approve it by the required majority. It is neither freely allowed nor absolutely barred.

  1. ASale is freely allowed at any time after purchase
  2. BSale is allowed only after the three-year holding period, with no exceptions
  3. CSale before three years from purchase is possible only with the approval of unitholders by the required majorityCorrect
  4. DSale is banned for the life of the REIT

Explanation

A REIT is expected to hold completed properties for at least three years from purchase. A sale earlier than that needs unitholder approval by the specified majority of votes. Option 2 is wrong because it denies this approval route, and option 1 ignores the holding condition entirely.

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