Corporate real estate acquisitions in Bermuda are a matter of careful balance.

That is because, at just 21 square miles, land in Bermuda is a finite and closely managed resource.

While the Government encourages international business and local enterprise, it also maintains policies aimed at ensuring sustainable development, fair access to housing, and preservation of the island’s unique environment and culture.

Corporate real estate ownership is thus weighed against both social considerations and market demands for residential and commercial development.

This column outlines the principal pathways and regulatory frameworks governing corporate acquisitions, drawing on Bermuda’s Corporate Landholding Policy 2022, the Companies Act 1981, and the Bermuda Immigration and Protection Act 1956.

Before acquiring real estate in Bermuda, a company must meet certain threshold requirements. It must be incorporated under the CA and have the necessary consents to conduct business in Bermuda.

There are two main corporate entities in Bermuda:

• An exempted company: located in Bermuda, operating internationally, but not conducting business with locals other than basic actions such as renting offices and engaging staff, eg, an international reinsurance company

• A local company: operating commercial activity locally and typically required to have at least 60 per cent Bermudian ownership and control

Our focus today is on exempted and local companies. Other corporate entities, such as limited liability companies, follow a similar regulatory framework.

Real estate acquisitions by exempted and local companies that are permitted without the Government’s special consent are leases for business purposes (typically office premises) for no more than 50 years, or leases to provide accommodation, or recreational facilities, for employees for no more than 21 years.

Renewal rights beyond these term limits are generally prohibited, maintaining the temporary nature of such acquisitions.

Exempted companies that maintain a physical presence in Bermuda, and obtain necessary government approvals under the CA and BIPA, may acquire the following interests with special consent:

• Freehold commercial real estate for use in connection with their business such as staff offices

• Designated residential units, tourist accommodations or an hotel

• High-value residential properties with an annual rental value of $126,000 or more, or condominiums with an annual rental value of $25,800 or more

• Former military base lands up to a maximum interest of 262 years, now managed by the Bermuda Land Management Corporation

In reviewing applications for special consent, the Government evaluates the potential impact on Bermuda’s economy, housing market, the conduct of the company, its directors and shareholders, and any advantages and/or disadvantages to Bermudians.

There is a strong policy preference for preserving local control and access to the island’s limited land resources.

Typical conditions applied to exempted company ownership include:

• Use limited to the stated purpose of acquisition

• No development or alteration to add a residential unit

• No letting or profiting without government consent

• No subdivision or boundary change permitted

Local companies enjoy a broader scope for landholding, but must also obtain special consent in many cases, for example:

• Trusteeship acquisitions: if the local company has an unlimited trust licence under the Trusts (Regulation of Trust Business) Act 2001, it may hold real estate as a trustee under a valid trust instrument and in compliance with BIPA

• Residential and hotel units: if the local company has a physical Bermuda presence, it may acquire residential units within approved schemes, including areas designated as economic empowerment zones or Hamilton residential schemes under the Economic Development Act 1968

• Former base lands: if the local company has a physical Bermuda presence, with requisite consent under the CA, it can acquire an interest of no more than 262 years

More generally, and subject to CA and policy approval, local companies can acquire:

• Commercial real estate for core business operations, eg, stores, offices

• Mixed-use properties combining commercial and residential use

• Residential properties, though typically these must not be let to third parties

Special conditions may apply under the policy and may include time limits after which real estate must be disposed of, restrictions on letting, and compliance with licensing regimes such as the Hotels Act 1969.

Regulation of corporate real estate acquisitions is complex and so any corporate contemplating an acquisition is advised to consult experienced attorneys at the earliest opportunity.

• Neil Molyneux is a senior associate at Appleby who specialises in property law, Jane Walker is a senior associate in the firm’s corporate practice and Milaun Perott is an associate in its corporate practice. A copy of this column can be obtained on the Appleby website at www.applebyglobal.com. This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult a lawyer