REAL ESTATE - More closed-end real estate funds could be marketed across Europe if the European Commission heeds advice from the Committee of European Securities Regulations (CESR).
In a note published at the end of January, the CESR, which advises the Commission, removed a barrier to increased cross-border business when it confirmed that Undertakings for the Collective Investment of Transferable Securities (UCITS) could market real estate funds across the EU.
But Järkko Syyrila, who advises the CESR expert group on investment management, played down the significance of the advice, pointing out that it merely removed confusion about the cross-border eligibility of certain fund types. Some European markets, notably the UK, have already incorporated the definitions into local legislation.
“Nothing has changed,” Syyrila said. “It will give investors exposure to real estate but not directly – which is exactly the situation in some markets already. All it does is clarify the definitions.”
It seems the CESR’s great leap forward, after industry consultation, will be to soothe the panic it created with its earlier, allegedly clumsy attempts to delineate transferable securities. Under its initial definitions, “managers would have had to take their portfolios back to the drawing board,” said Investment Management Association (IMA) spokeswoman Helen Stephenson. “It would have rewritten the rules.” Those definitions now appear to have shelved indefinitely.
Describing the new advice as “significant”, the IMA said it was evidence the CESR had listened to industry concerns.
Under the new rules, real estate fund managers will still have to embark on a lengthy notification process if a fund is to be marketed in more than one European country. On this issue the IMA expressed disappointment that the CESR had not recommended removing “complexity and bureaucracy” from existing rules.
“The CESR would have made the biggest impact by removing it,” said Stephenson. “We’d have like to have seen more boldness. As it is, the advice hasn’t gone far enough.”
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