REAL ESTATE - The European Parliament’s Committee on Economic and Monetary Affairs has called for a pan-European investment framework for open-ended real estate funds.
The move follows a report issued by the Committee of European Securities Regulators (CESR) confirming that Undertakings for the Collective Investment of Transferable Securities (UCITS) could market closed-ended real estate funds across the EU.
In an amendment to CESR’s proposal, German MEP Wolf Klinz said any further legislation on non-UCITs-eligible assets, including real estate funds, “should be proportionate to the risks for investors”.
He told IPE Real Estate that the inclusion of open-ended funds as UCITS-eligible – championed by Germany – would “need further thought”. German hopes were effectively scuppered when Deutsche Bank’s real estate fund arm, fearing a liquidity crisis, in December froze its core German real estate fund.
“If you’d have asked me a couple of months ago, I would have been more open to the idea,” said Klinz. “But since the recent difficulties I’ve become somewhat more cautious – although it isn’t clear that those difficulties were intrinsic to the asset vehicle, rather than the result of mismanagement.”
But he also held out the possibility that asset classes now perceived as higher risk could be eligible in future. “Markets develop and so should eligible assets,” he said. “Closed funds and REITs could and should be included. What we shouldn’t do is decide once and for all today which assets should be eligible.
“At the same time we’ve spent 20 years building up the UCITS brand and to date there hasn’t been a single scandal. We don’t want that to change.”
