Navigating the Belgian Real Estate Investment Trust (REIT) landscape: under which conditions can a Belgian REIT acquire shares in a Belgian Real Estate Investment Fund (REIF)?
27 May 2024
Shares in a Belgian REIF (fonds d’investment immobiliers spécialisés – FIIS/Gespecialiseerde vastgoedbeleggingsfondsen – GVBF) are considered as eligible investments for Belgian REIT in accordance with the Belgian Act on REITs.
The definition of Belgian REIFs in the Belgian Act on REITs is however restricted to ‘alternative collective investment undertakings with a fixed number of shares as referred to in Article 286, § 1 of the law of 19 April 2014 relating to alternative collective investment undertakings and their managers (the AIFM Law), whose exclusive purpose is collective investment in the category of authorised investments as referred to in Article 183, paragraph 1, 3° of the AIFM Law’.
Besides these undertakings, the status of REIF is open, as an exception, to entities specifically referred to in Article 281, paragraph 2, of the AIFM Law (which do not qualify as AIFs). These non-AIF REIFs include (but are not limited) to the following:
a) undertakings for investment with a single shareholder within the meaning of the ESMA Guidelines (i.e. application of the look-through principle); and
b) entities that serve as an investment vehicle in which shareholders, as a collective group, exercise discretion over day-to-day operations.
The shares of these non-AIF entities, to the extent that they are issued by a real estate company within the meaning of the Belgian Act on REITs and to the extent that 25% of the share capital is held directly or indirectly by the public regulated real estate company (public REIF), fall under a different category of ‘immovable assets’ i.e. ‘shares with voting rights issued by real estate companies’.
The consequence of this categorisation – as confirmed by the FSMA in its opinion dated 21 December 2022 – is that shares in REIFs which fall under Article 286 of the AIFM Law (i.e. REIFs that qualify as AIFs) are subject to a specific threshold according to which the value of the shares attached to such REIFs cannot exceed 20% of the public BE-REIT’s consolidated assets. Conversely, REIFs that fall under Article 281 of the AIFM Law (i.e. REIFs that do not qualify as AIFs) which are real estate companies within the meaning of the Belgian Act on REITs do not fall under that specific threshold, as it is understood that BE-REITs need to hold more than 25% of an REIF’s share capital to be considered as ‘immovable assets’.
It is also important to remember that shares in REIFs can only be held by ‘eligible investors’, categorised as professional either by nature or by election. Public BE-REITs that hold these securities are deemed eligible investors either by nature if they fulfil the criteria of large companies set out under MiFiD or by election once they are legal entities registered in the eligible investor register held by the FSMA.
In a nutshell, the 20% threshold of the consolidated assets of the public BE-REIT applies only if BE-REITs invest in and hold shares in REIFs that qualify as AIFs and not in relation to non-AIFs REIF entities which fall under Article 281 of the AIFM Law and which are real estate companies within the meaning of the Belgian Act on REITs.
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