The AIFMD and other European developments affecting the real estate fund industry | Whitepaper
The AIFMD was approved by the European Parliament on 11 November 2010 and now attention transfers to the individual Member States and the European Securities and Markets Authority (ESMA) for detailed rules to be prepared on several key aspects in the "Level 2" legislation process. The AIFMD will come into force in early 2011 and is likely to be finally implemented by EU Member States by early 2013.
As mentioned in our previous update in August of this year, the Directive's "catch all" approach to regulation means that, although the drafting has been blind to some of the idiosyncrasies of real estate funds, real estate fund managers fall squarely within its intended scope. It remains the case that many of the concepts which the Directive aims to address (and the terms in which they are described) are more appropriate to hedge fund strategies, and this means that greater guidance and interpretation will be required to apply the provisions to the real estate fund manager model.
Real estate fund managers should anticipate that every part of their business will be impacted in some way, as regulations encompass capital requirements, compliance processes and reporting, compulsory use of depositaries and prescriptive remuneration policies.
Whilst there is no apparent need to "onshore* existing non-EU funds, managers need to consider the impact of the new regulations in the round - alongside tax, investor relations, human capital and other concerns - in considering what changes may be required either to their funds or the manager's own structure and location.
This whitepaper is available in PDF format only.
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