BRUSSELS: The Brexit decision has raised questions as to whether London’s role as the financial capital of Europe may be altered and therefore open the way for other European cities to reposition themselves as financial centers. In this context, the Belgian government has tackled the issue of attracting more foreign investors, including devising new means of investing in real estate in Belgium and elsewhere.
A new and interesting opportunity for Belgian and foreign fund managers and investors to structure their real estate investments (“FIIS Regime”) was recently launched, which offers both a flexible regulatory framework for real estate investments and an attractive tax regime. The contours of the FIIS Regime are set out in the Royal Decree of November 9, 2016, relating to specialized real estate investment funds (“FIIS” or “Fonds d’Investissement Immobiliers Spécialisés”/”GVBF” or “Gespecialiseerd Vastgoedbeleggingsfonds”) (“Royal Decree”).
The new FIIS Regime seeks to fill needs unmet by Belgium’s well-known regime of regulated real estate companies (“REIT Regime”), as established by the Law of May 12, 2014, and the Royal Decree of July 12, 2014. The REIT Regime is appropriate for certain types of investments and investors, and it has given all existing Belgian real estate funds the option of benefiting from a more closely tailored regime, rather than operating under the more burdensome framework of alternative investment funds (governed by the Law of April 19, 2014, on alternative investment funds and their managers (“AIFM Law”)). However, the REIT Regime has revealed certain shortcomings, as its framework and characteristics are not always in line with the needs of institutional real estate investors. In particular, a REIT must be listed on a stock exchange and must comply with indebtedness ratio and diversification requirements.
The REIT Regime and the FIIS Regime are thus meant to coexist, with the former focused on long-term diversified investments and the latter on often shorter investment terms without diversification requirements and leverage limitations.
