90 PERSPECTIVES ON BUSINESS AND ECONOMICS | VOL 42 | 2024 Another feature regarding OPCIs is their portfolio composition. By law, OPCIs are required to abide by certain portfolio weightings for their various assets. The types of holdings these OPCIs may use are presented in Table 1. The main rule governing these categories is that a minimum of 60% of the OPCI’s overall assets consist of categories 1 through 5. Further subdividing this 60%, 50% (so an overall 30%) must be from categories 1 and 2. From there, the regulations specify that of category 1 holdings, only up to 20% can be undeveloped land. This delineation is made to align the OPCI with its intended purpose to hold commercial rental properties. Finally, a minimum of 10% of the OPCI must be held in liquid assets, such as cash (category 6) (Moroccan Capital Markey Authority, 2022). Also, real estate assets contributing to the structure must be held for at least 10 years to benefit from certain tax exemptions pertaining to taxation of gains for the OPCI (Sabri et al., 2020). Another factor in understanding OPCIs is the financing of their operations, which relates to some of the risk that may accompany such financial instruments. Per the AMMC, OPCIs are allowed to obtain medium- and long-term loans up to 40% of the value of real estate assets. These borrowings take the form of bonds or bank loans with a maturity date of more than one year. Furthermore, these OPCIs can gain cash by borrowing up to 10% of the value of financial assets. These cash borrowings take the form of commercial paper issues or bank loans with a maturity date of less than one year (Moroccan Capital Market Authority, 2022). The AMMC has outlined many facets of these OPCIs and their functioning as a financial instrument. Analysis of how the instrument operates clarifies how challenges may arise in their implementation within Morocco’s financial ecosystem. Challenges to OPCIs Although there is great promise for the development of OPCIs as a means for resolving issues within the country, there are inherent risks associated with these investment vehicles that could pose a threat to their success moving forward. Included among them are liquidity risk, leverage risk, interest rate environments, challenges with institutional investor sentiTable 1 OPCI asset categories *Real property may be registered with the land property and mortgage registrar; real rights requiring registration include mortgages, transfers, easement, and temporary seizure (Baker McKenzie, n.d.). †Sukuk certificates are financial instruments, similar to bonds, that adhere to the Islamic religious laws, known as sharia (Ganti, 2022). Source: Moroccan Capital Market Authority, 2022. Description Category 1 Registered real estate acquired or constructed for rental and buildings under construction intended for rental as well as any real right* relating to said property 2 Any real right conferred by a title or by a lease due to the occupation of a dependence of the public domain of the state 3 Any real right provided for by foreign legislation and similar to the assets in categories 1 or 2 4 Capital securities, sukuk certificates,† and debt/debt securities, which allow capital sharing for companies predominantly in real estate (excluding partnerships and civil companies) 5 Securities of other OPCIs 6 Cash and more liquid financial instruments 7 Debt securities not allowing capital sharing 8 Investments in form of account advances
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