New investors and control measures for institutional BE-REITs
A Royal Decree provides for the conditions under which an individual can invest in an institutional BE-REIT. At the same time, it specifies the application of the internal control and independent compliance function to the institutional BE-REITs. These provisions entered into force on 17 May 2018.
The law of 22 October 2017 has enlarged the authorised activities of the (institutional) BE-REITs to the participation to PPPs and relaxed the conditions to form a joint venture with a BE-REIT, and to opt for the institutional BE-REIT status. Subject to Royal Decree this law also gave the possibility for individuals to invest in institutional BE-REIT. Read our newsflash.
Individuals investing in institutional BE-REITs
Individuals can now also invest directly in the institutional BE-REIT, under the following conditions:
- in case of subscription or purchase: the value of the counterpart in the hands of the acquirer must be at least of 100,000 EUR;
- in case of gift: the amount originally subscribed or paid by the donor must be of at least 100,000 EUR; and
- in case of inheritance, the aforementioned condition of minimum value is deemed met.
Internal control and independent compliance
One of the most relevant modifications brought by the law of 22 October 2017 is the decrease of the participation threshold of the BE-REIT in order for a joint venture to opt for the status of institutional BE-REIT. There is no need for a control (of the BE-REIT over the institutional BE-REIT) anymore, but a participation of 25% + 1 share is sufficient. The Royal Decree adapts, from a formal standpoint, the regulation of BE-REIT to take this into account, in particular by abolishing all previous provisions regarding “control requirement” and obligations to include put and or call options in favour of the BE-REIT in case of deadlock situation. The Royal Decree but also specifies that:
- the internal control organised at the level of the BE-REIT also applies to the institutional BE-REIT;
- the independent compliance function put in place at the level of the BE-REIT also applies to the institutional BE-REIT; and
- the articles of association of the institutional BE-REIT are published on the website of the BE-REIT.
The market shows that relevant actors did not wait long to jump at the opportunity given by the new joint venture provisions. Let’s know wait and see whether BE-REITs shall become an important actor in the infrastructure market knowing that, taking into account the length of an award procedure, it can still take time to see significant changes in that field.
Ariane BrohezPartner Attorney at Law
Ariane is a member of the Loyens & Loeff Real Estate Practice Group in Belgium and of the Investment Management/Funds Team. She is a partner in our Brussels office with a broad practice of counselling in real estate transactions and taxation.T: +32 2 743 43 21 M: +32 495 21 26 59 E: email@example.com