REAL ESTATE - International bank Merrill Lynch expects that Dutch real estate funds will be a main target for foreign investors.

Several possible take-over candidates have been stated by Merrill Lynch in its report on the European real estate sectors. Among those are Rodamco Europe, VastNed Offices, Wereldhave and Eurocommercial Properties.

The main reason for the changes are based on modernisation of the so-called fiscal investment institutions, which have been put in place by the Dutch government.

Until now, foreign investors only were allowed to hold a stake of up to 25% in the real estate funds. This main blockage for take-over is now expected to be removed.

According to Dutch news sources, the Merrill Lynch analysis already has been supported by the fact that several law firms in the Netherlands, such as Clifford Chance, have stated that they have been asked by foreign parties related to the fiscal changes.

Another main issue supporting possible take over action is the fact that there will be changes regarding the equalisation of the fiscal position of funds with a stock exchange listing and ones without. The latter will result in better options for funds to attract additional capital from the capital market.

Dutch law firms also have stated that a decrease of dividend tax of real estate funds will make them more attractive for third parties.

Several Dutch real estate funds, such as Rodamco America, Haslemere and Uni-Invest, have already been taken over by foreign investment companies the last years.

Not only Dutch funds will be targeted, analysts expect, Germany, Italy and the UK also are currently changing their fiscal regimes for real estate funds.

Overall, the Dutch real estate sector seems to be in a flux. The targeted take-over of DIM Vastgoed (Real Estate) by Homburg Invest, one of the main shareholders, has again hit the headlines in the Netherlands.

Homburg officials have stated that they will continue in their pursuit to take DIM Vastgoed over. This surprised the market last week when the fund put its American real estate portfolio on the market.

To support its take-over move, Homburg placed on Wednesday 6.4 million new shares on the market (€21m), which could be used for the DIM project. Since more than one and a half years, Homburg Invest and its main competitor American private equity company Equity One have been trying to take over DIM Vastgoed, until now without success. Homburg currently owns 23% of DIM Vastgoed while Equity One holds 41%.