BRUSSELS: Belgium recently introduced the regulatory framework for an attractive new real estate investment vehicle, the specialized real estate investment fund (gespecialiseerd vastgoedbeleggingsfonds (GVBF) / fonds d’investissement immobilier spécialisé (FIIS)) (SREIF).
This new type of closed-ended fund will target qualifying professional investors only, and will be subject to “light-touch” supervision. A fast registration procedure is available and no license is required. In terms of investment policy, no diversification requirements or limits on leverage apply, and the fund may hold real estate in Belgium as well as abroad. To the extent a SREIF qualifies as an “alternative investment fund” under the Alternative Investment Fund Managers Directive 2011/61/EU (AIFMD), its manager is in principle subject to that directive (as implemented in Belgium).
The fund offers interesting new opportunities to structure investments for both Belgian and foreign institutional investors in Belgian, as well as foreign real estate portfolios. Investment and operational income is exempt from corporate taxation at the level of the SREIF. In addition, a favorable treatment applies in relation to income derived by the fund from foreign real estate income.
Since only institutional investors are allowed to invest in SREIFs, SREIFs are subject to a very light regulatory regime. The fund must apply for registration with the SPF Finances (Ministry of Finance). The SPF Finances carries out a check to assess whether the relevant formal requirements1 are met (“check the box”), but does not proceed to any further checks, e.g. no check on the investment policy, valuation of the assets, creditworthiness of the fund, etc. In principle, the registration process can be completed within 30 business days of the date on which the file is complete.2
SREIFs are not subject to ongoing prudential supervision by the Belgian FSMA (the financial conduct authority), although the FSMA can monitor matters such as (i) whether an SREIFs does indeed only target qualifying investors (see below) and (ii) compliance with the AIFMD requirements by the manager (to the extent the SREIF qualifies as an AIF for purposes of the AIFMD – in that respect, see below).
The fund offers interesting new opportunities to structure investments for both Belgian and foreign institutional investors in Belgian, as well as foreign real estate portfolios.
