Luxembourg Real Estate Investment Funds 2018 - alfi survey
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alfi survey Luxembourg Real Estate Investment Funds 2018
table of contents
executive summary 4
introduction 6
I CSSF data on REIFs in Luxembourg 6
II Survey scope 7
II a “REIFs” as direct funds 7
II b REIF regimes 7
III Methodology 7
IV Luxembourg REIF framework 7
IV a Regulatory framework: regulated vs unregulated structures 7
IV b Legal structures 8
V Market coverage 9
survey results 10
1 New launches 10
2 Initiator origin 10
3 Legal regime and structure 11
4 Fund structure 14
5 Investment style 14
6 Liquidity 15
7 Term 15
8 Geographical investment focus 16
9 Target sectors 16
10 NAV distribution 17
11 GAV distribution 17
12 Target gearing 17
13.1 Management fees 18
13.2 Performance fees 18
14 Investors 19
15 Investor origin 20
16 Private distribution 21
17 Accounting standards 21
18 Consolidated accounts 24
19 INREV NAV 24
20 NAV calculation frequency 24
21 External fund level valuation 25
22 Property valuation 25
23 Listing 26
24 Currency 26
25 Service providers 27
glossary 28
3
executive summary
ALFI is pleased to present the 2018 REIF survey, its 27 manager-regulated AIFs, 27 RAIFs dedicated to
12th edition. real estate and 11 SICARs.
2017 and the first two quarters of 2018 were Any indirect real estate funds, such as real estate
another good period for Luxembourg-domiciled fund of funds, (real estate) debt funds and securi-
real estate funds. The number of surveyed REIFs tisations were not taken into consideration in the
continued to grow, this time by 45, bringing the survey.
total number to 304 surveyed vehicles, including
Highlights Trends Fund structures
As in last year’s survey, the legal forms of the SCS/ Though umbrella funds remain popular due to
SCSp represent most of the surveyed funds at 32%, various practical and cost considerations, the
either in the form of a SICAV (51 funds) combined trend over the last few years has been towards
with the SIF regime, or set up as manager-regulated simplification of structures and strategies, a trend
AIFs1. that is again evidenced in this survey.
The RAIF regime is now firmly established with 27 72% of REIFs have a single-compartment structure,
funds, after 15 launched last year and just 1 RAIF in compared with 73% reported in the 2016 survey
2016, the year of its inception. and 76% in the 2017 survey. 61% of the funds
surveyed are closed-ended.
Similar to the survey findings in 2015 and 2016, the
use of the FCP has continued to reverse compared The SIF regime can be said to be firmly established
to findings from earlier surveys, with SICAVs now as the favoured regulatory regime for REIFs in
accounting for 50.3% of the surveyed funds. This Luxembourg. The legal forms of the SCS/SCSp
is the first year in which the survey shows a relative continue to increase in popularity since their
majority of opaque over transparent entities. All introduction into Luxembourg law in 2013.
in all, 71% of the total REIFs fall within the SIF
regime, a slight decrease as compared with last Finally, 27 RAIFs have been reported in 2018,
year’s results. compared with 15 RAIFs in 2017 and only one
RAIF in 2016.
In this survey on the past year, new funds were
launched overwhelmingly by initiators/AIFMs from Fund size and gearing
Europe (mainly Benelux, Germany and the UK) and
from the USA. In line with the survey findings of previous years,
smaller funds continue to make up the majority
Investment strategies of REIFs, with 56.5% falling in the category of a
NAV of under EUR 100 million. Overall, 92 funds
The most common target sector strategy remains reported a target NAV of less than EUR 100 million.
the “Multi-sector” strategy, accounting for 38%,
which is however a significant decrease compared 32% of funds aim to keep their gearing below 20%
with 2016 (50%) and 2017 (40%) figures. Among loan-to-value ratio (LTV), while a further 51% aim
the single-sector strategies, “Retail” (14%) and to keep LTV levels to below 60%.
“Residential” (16%) this year show comparable
results to previous years. “Office” investments as Fees
a single-sector strategy represent only 10% of the
funds surveyed. This year’s survey confirms that the most commonly
used basis for management fee calculations is the
77% of the surveyed REIFs invest in Europe, NAV, with a share of 33%, compared to the GAV
whereas 6.6% of funds invest globally and 7.9% in which stands at 23%.
the Asia-Pacific region.
33% of REIFs charge a management fee between
0% and 0.5%, while 20% charge a fee exceeding
1.5%.
1 “Manager-regulated AIF”, as further detailed in section IV a, shall refer to an investment fund which is not established
under a regulated fund regime in Luxembourg (e.g. SIF/SICAR), but is instead formed under corporate or partnership law. The
managers of such a vehicle are typically themselves regulated or registered directly under AIFMD.
4
Investors Fund reporting
80.6% of investors come from Europe, with the Comparable to last year’s results, a significant
remainder predominantly from the Americas. 5.2% proportion of the surveyed funds (39%) report
are highly diversified, which confirms the global under IFRS.
appeal of the Luxembourg fund regimes.
55% of the REIFs report a quarterly NAV. Due
Luxembourg-domiciled funds are mainly used for to the fact that 61% of REIFs are closed-ended,
small groups of institutional investors, with 81% the reporting of a monthly NAV (for 15%) is
having 25 or fewer investors. mainly due to investors’ demand for performance
measurement rather than unit redemption. 46% of
Similar to the findings of previous surveys, only 2% the funds surveyed report consolidated accounts.
of the surveyed REIFs reported having more than
100 investors. REIFs are widely distributed (despite 72% of the funds value their property on an annual
a possible focus on specific geographical areas): 46% basis, with 17% requiring quarterly valuations.
of funds are distributed in 2 to 5 countries, and 10% Almost all of the funds use an independent
in 6 or more countries. There is also a significant appraiser, with RICS (74.6%) being the preferred
proportion of funds (44%) that are distributed in standard.
one single country.
This present edition of the ALFI REIF survey
These numbers clearly show the attractiveness of confirms that Luxembourg remains the favoured
Luxembourg REIFs to a global investor base. They location to establish and maintain multi-
also underline Luxembourg’s strength as a cross- geographical and multi-sectoral regulated REIFs,
border distribution hub. which continue to appeal to institutional investors
and fund managers from around the world.
5
introduction
The ALFI REIF survey is compiled annually by the The ALFI REIF survey was conducted during
ALFI head office with the help of the ALFI REIF the third quarter of 2018 and reflects the market
Survey Working Group in the most comprehensive composition as at the end of June 2018.
form possible.
The main objective of producing this survey is to
The ALFI REIF Survey Working Group would gain an understanding of market trends rather than
like to thank all those involved in the survey, from claiming to provide complete and comprehensive
responding to the survey questions and compiling data, although a significant proportion of the
the data to providing commentary. Luxembourg REIF market has been captured, see
section V.
I CSSF data Number of Luxembourg real estate fund units
on real estate
funds in
Luxembourg
*
Source: CSSF
Net AuM of Luxembourg real estate funds
*
Source: CSSF
* includes institutional real estate funds preceding the SIF Law (pre-2007)
6
II Survey scope II a “REIFs” as direct funds debt funds, intermediary financing vehicles set up
for the acquisition of property or similar collective
For the purpose of this survey, the term “REIF” investment vehicles.
refers to regulated fund vehicles, manager-regulated
AIFs, RAIFs and SICARs which invest in real estate II b REIF regimes
assets either directly or via intermediary entities, so-
called special purpose vehicles (SPVs). REIFs in scope of the present survey are organised
(each as defined and described in section IV a below)
Indirect real estate funds that invest in listed real • under Part II,
estate-related securities as portfolio investments are • under the SIF Law,
outside the scope of this survey and not captured by • as manager-regulated AIFs,
the term “REIF” as used herein. • as RAIFs, and
• as real estate SICARs.
The survey does not cover real estate funds of
funds (or “funds of REIFs”), real estate-backed
III Methodology The ALFI REIF survey is based on a comprehensive • distribution method,
questionnaire. • fees,
• investor type and origin,
The questionnaire, which sampled the status as at • accounting standard (GAAP),
June 2018, included questions relating to each fund’s • consolidated accounts,
• legal structure and regime, • INREV NAV,
• investment style, • valuation methodology, and
• geographical investment region • service providers
• target segment of investment
• net asset value (NAV), gross asset value Where possible, results are compared with those of
(GAV) and target gearing, previous ALFI surveys.
IV Luxembourg Luxembourg REIFs can be classified as regulated investment restrictions applicable to UCITS.
REIF framework or unregulated. In addition, they can take different Funds subject to the 2010 Law can in principle
legal forms and be set up using different structures. be sold to any type of investor, i.e. institutional
investors and high net worth individuals as well as
IV a Regulatory framework: regulated retail investors.
vs unregulated structures
Funds subject to the SIF Law may only be sold to
Regulated structures, for the purpose of this survey, so-called “well-informed” investors. In addition to
are those fund vehicles that are authorised and institutional and professional investors, this opens
supervised by the CSSF. The laws and regulations SIFs for high net worth individuals (HNWIs) who
applicable to Luxembourg regulated funds are meet the requirements laid out in the SIF Law. SIFs
comprised of laws, circulars issued by the CSSF and are not subject to general investment restrictions
certain Grand-Ducal regulations. but must ensure adequate risk diversification
and disclosure during the fund’s life span. Any
Part II funds and SIFs exceptions are subject to review by the CSSF on a
case-by-case basis.
The primary laws applicable to regulated funds are
• the Law of 17 December 2010 on undertakings SICARs
for collective investment, as amended (the 2010
Law) and The société d’investissement en capital à risque
• the Law of 13 February 2007 on specialised (SICAR) is a vehicle governed by the Law of 15
investment funds, as amended (the SIF Law). June 2004 on the investment company in risk
capital (SICAR Law), tailored to qualified investors
While Part I of the 2010 Law covers Undertakings investing in venture capital and private equity.
for Collective Investment in Transferable Securities
(UCITS), its Part II covers other funds. These Part II The SICAR can take various legal forms (SCS, SA,
funds must comply with each relevant EU country’s Sàrl, SCA or other) and, while regulated, is not
local distribution rules and certain investment subject to diversification requirements.
restrictions, albeit much less stringent than the
7Manager-regulated AIFs SOPARFIs and limited partnerships do not benefit
from any special legal or tax regime, but like
REIFs which are not regulated by these “product any other fully taxable Luxembourg company,
laws” may nevertheless be Alternative Investment SOPARFIs benefit from a participation exemption
Funds under Directive 2011/61/EU on Alternative regime and are generally entitled to claim the
Investment Fund Managers (AIFMD) and the Law application of double tax treaties.
of 12 July 2013 on Alternative Investment Fund
Managers. They are referred to herein as “manag- Unregulated vehicles tend to have a small group of
er-regulated AIFs”. investors and a simple capital structure, but may still
have a high value of AuM.
RAIFs
While unregulated vehicles operate in a manner
For the third time, the ALFI REIF survey includes similar to regulated funds, unregulated vehicles offer
Reserved Alternative Investment Funds (RAIFs). greater flexibility, for example in terms of choice of
service providers, and lower set-up and operating
The RAIF was introduced by the Law of 23 July costs compared to investment vehicles subject to
2016 on reserved alternative investment funds (RAIF regulatory oversight and restrictions.
Law). The RAIF vehicle combines the characteris-
tics and structuring flexibilities of the SIF and the By contrast, regulated vehicles benefit, among other
SICAR. In terms of regulatory regime, the RAIF things, from a high degree of investor protection.
qualifies as an AIF managed by an authorised AIFM. They are also more sought after by (foreign) LPs
A RAIF launch does not require pre-approval by the which, themselves, need to abide by a specific local
CSSF. In terms of product regime, the RAIF can, by regulatory framework, or to serve as feeder or
default, benefit from the SIF rules or, by election, the “sister” structures to existing ones outside the EU.
SICAR rules.
IV b Legal structures
The RAIF regime is applied on demand, and the
constitutive documents must expressly provide that REIFs governed by Part II, the SIF Law or the
the investment vehicle is subject to the provisions of RAIF Law may be set up in corporate form (e.g. as
the RAIF Law. a SICAV-SCA or SICAF-SA), in contractual form
(FCP) or as a limited partnership (SCS/SCSp). A key
The RAIF structure allows fund initiators to set up determining factor in the selection of the structure
Luxembourg-domiciled funds that are not subject is the tax regime applicable to investors: FCPs
to regulatory approval by the CSSF but are instead and SCSps are tax transparent, whereas corporate
supervised at manager level. This option allows for a entities are opaque for tax purposes.
significantly reduced time to market.
Funds governed by Part II, the SIF Law, the SICAR
Unregulated funds Law and the RAIF Law may adopt an umbrella
structure with multiple sub-funds where, for
Unregulated vehicles are typically set up as instance, sub-funds have different investment
companies or partnerships under the Law of 10 policies or are restricted to certain types of investors.
August 1915 on commercial companies, as amended The umbrella fund is legally treated as a single
(1915 Law). They often take the form of private or entity. However, in principle, each sub-fund is
public limited companies (Sàrl or SA), partnerships responsible for its own liabilities and its assets are
limited by shares (SCA) or limited partnerships ring-fenced. For the purpose of this survey, “fund
with or without legal personality (SCS/SCSp). A units” shall mean the number of single-compartment
company that has as its main purpose the holding funds plus the number of active sub-funds in
and financing of participations in other companies umbrella structures.
(which in turn may own real estate or other real
estate investment vehicles) is often referred to as a
société de participations financières (SOPARFI).
8V Market The data from the Commission de Surveillance (including Part II funds and SIFs, excluding real
coverage du Secteur Financier (CSSF) below shows that the estate funds of funds). In addition, the ALFI REIF
ALFI REIF survey provides a good overview of the survey includes 27 manager-regulated AIFs, 27
market. RAIFs and 11 SICARs.
CSSF data shows 333 REIFs in existence as at June This testifies to the wide coverage of the ALFI REIF
2018, a figure that takes into account funds under survey and the fact that, over the past years, the
Part II, under the SIF Law and real estate funds of relative scope of the survey has been expanding in a
funds. The ALFI REIF survey captures 237 REIFs growing market.
Number of fund units surveyed
compared with total fund units as per CSSF
*
Source: ALFI REIF survey 2018
* excludes funds of REIFs as of 2016
9survey results
1 New launches 24 new fund units were launched in 2017 and 11 bringing the REIF population surveyed to 304.
in surveyed new fund units were reported as at June 2018,
period
Number of fund units launched
Source: ALFI REIF survey 2018
2 Initiator origin Over the years, initiators from Europe have been total funds. Canadian initiators have been rising in
responsible for the majority of REIF launches. percentage points (pps) over the past years, with
This year, the Benelux countries represent 31% of a market share of 5% overall for 2018. 74% of
initiators, followed by Germany (18%) and the initiators are AIFMs, which represents a 6 pps’ rise
UK (11%). Initiators from the US represent 6% of compared to last year’s survey.
Proportion of REIFs launched Proportion of AIFM initiators
by initiator origin
Source: ALFI REIF survey 2018
10Proportion of REIFs launched by initiator origin
Source: ALFI REIF survey 2018
3 Legal regime The majority of REIFs (71%) fall under the SIF law. fund vehicle suitable for all types of alternative
and structure This reflects the continued popularity of the SIF re- investment fund products.
gime for REIF initiators seeking a regulated onshore
This year’s survey also includes 27 RAIFs.
Legal regime
Source: ALFI REIF survey 2018
79 of the 304 REIFs were set up as FCPs, usually in supporting regulatory regimes suitable to initiators’
combination with the SIF regime. and investors’ requirements. It may also be
indicative of an increased use of manager-regulated
The increased popularity of the SCS/SCSp (15%) AIFs, specifically in limited partnership form (at the
along with the SICAV-SCA, the SICAV-SA and the expense of the FCP given its specific transparency
SICAV SCS/SCSp combinations reflects the versa- features), this year amounting to 97 out of the 304
tility of the Luxembourg regulatory environment in surveyed.
offering both transparent and opaque vehicles and in
11Basic structure
Source: ALFI REIF survey 2018
The most recent development in legal structuring has 97 funds set up in these forms (32%). 50% of REIFs
been the overhaul of the limited partnership laws in are SICAVs.
Luxembourg (the SCS and SCSp) in 2013. There are
Source: ALFI REIF survey 2018 Source: ALFI REIF survey 2018
12CSSF data on fund units excl. SICARs
as at 30 June 2018
for comparison purposes given the different approach to data collected
Legal regime and basic structure combined
Source: CSSF
Legal regime Basic structure
Source: CSSF Source: CSSF
134 Fund structure 72% of the surveyed REIFs are single-compartment use feeder vehicles and 17% have complex share
vehicles. The remaining funds have a multi-compart- classes, allowing for different management and
ment structure (i.e. umbrella with sub-funds). performance fee structures for different investors,
15% use the umbrella structure solely for separate for example. 31 of the surveyed funds use a pooling
investment strategies (similar to last year’s survey), structure. The overall trend over the past several
4% use an umbrella solely for co-investment, and years towards simplification of structures and
18% combine both types of usage. 10% of the funds strategies was confirmed by this year’s results.
5 Investment Outside SICARs, which by default are “Opportu- strategies. Part II funds predominantly pursue a
style nistic”, 59% of the REIFs surveyed are “Core” “Core” strategy, while the SIF regime is flexible
funds, with the remainder split between “Value- (encompassing “Core”, “Value-added” and
added” (26%) and “Opportunistic” (15%) fund “Opportunistic” strategies).
Source: ALFI REIF survey 2018
146 Liquidity 61% of the surveyed funds are closed-ended, as demand, there appears to be a slight shift towards
compared with 68% in 2017. The drop in the offering investors more flexibility: the results suggest
number of closed-ended funds correlates with an that liquidity management tools allow to put
increase of open-ended funds with restriction (from relevant safeguards into place for open-ended funds
16% last year to 22% this year). While this still that would otherwise have been launched as closed-
reflects the main characteristic of real estate as ended. 6% of REIFs are semi open-ended, with
an asset class, namely its illiquidity and inherent 11% being fully open-ended with no restrictions on
difficulty to provide investors with liquidity upon redemptions.
Source: ALFI REIF survey 2018
7 Term 41% of all REIFs have a term duration of 8 to 10 Only 12% of funds have a duration of 7 years or
years or 11 to 15 years, while 47% of fund terms less, which reflects the typical need of REIFs for a
are “infinite”. longer timeframe to fully implement their strategies.
Source: ALFI REIF survey 2018
158 Geographical 69.7% of REIFs focus on investment in the EU-28. world, which is also evidenced by the 20 funds that
investment focus 17 funds invest mainly in North America, and 24 do not have a geographical focus, reflecting the
funds in the Asia-Pacific region. Luxembourg REIFs suitability of Luxembourg REIFs for investment
are used for investment in all major regions of the strategies spanning the globe.
Luxembourg REIF investment regions
Source: ALFI REIF survey 2018
9 Target sectors 38% of the REIFs surveyed identify as targeted on which residential property (16%) is the most com-
multi-sector investments. More than half of REIFs mon target sector.
invest predominantly into one specific sector, of
Source: ALFI REIF survey 2018
1610 NAV Smaller funds continue to make up the majority of of less than EUR 100 million, while 10% fall into
distribution REIFs, with 56.5% with a NAV of under EUR 100 the target NAV categories greater than EUR 800
million. Overall, 92 funds reported a target NAV million.
NAV (in million EUR) Target NAV (in million EUR)
Source: ALFI REIF survey 2018 Source: ALFI REIF survey 2018
11 GAV GAV (in million EUR) Target GAV (in million EUR)
distribution
Source: ALFI REIF survey 2018 Source: ALFI REIF survey 2018
12 Target gearing 32% of funds aim to keep their gearing below 20% to keep LTV levels to below 60%.
loan-to-value ratio (LTV), while a further 51% aim
Source: ALFI REIF survey 2018
1713.1 Manage- 33% of the surveyed REIFs use their NAV as the (33%) charge a fee in the range from 0% to 0.5%,
ment fees basis for management fee calculations. followed by the range between 0.51% and 1%
The majority of the funds that do charge a fee (26%).
Management fee calculation basis Management fee range distribution
Source: ALFI REIF survey 2018 Source: ALFI REIF survey 2018
13.2 Perfor- More than half of the surveyed REIFs do not levy a pared to last year. Where the performance fee equals
mance fees performance fee. Among those that do, 43% charge 20% this year’s survey also registers a decrease of 6
a fee of less than 20% which is a drop of 3 pps com- pps (40% this year compared to 46% last year).
Charging of performance fee Performance fee (%) charged as per PPM
Source: ALFI REIF survey 2018 Source: ALFI REIF survey 2018
Performance fee hurdle rate
Source: ALFI REIF survey 2018
1814 Investors As previous surveys, 2018 results show that REIFs This reflects the fact that institutional investors
typically do not have a large number of investors. aiming for larger investments make up the
81% of REIFs have 25 investors or fewer, and 53% majority in REIFs. As a result, there tends to be a
have 5 investors or fewer. 19% of funds have more smaller number of investors per fund. It is also an
than 25 investors, while only 2% have more than expression of the continuing trend towards a larger
100 investors. number of smaller funds, with a smaller number of
investors per fund.
Number of investors
Source: ALFI REIF survey 2018
A vast majority of the funds surveyed (87.5%) have 6.9% of the funds. Only very few funds have retail
institutional investors, with HNWIs investing in investors.
Type of investor
Source: ALFI REIF survey 2018
1915 Investor The majority of investors (80.6%) continue to be to last year) have investors from 2 to 5 countries
origin European, while 11.5% of funds have investors and 8% have investors from 6 to 10 countries
from the Americas. 44.1% of the funds have (comparable to last year).
investors from 1 country only, 46.1% (comparable
Origin of investors
Source: ALFI REIF survey 2018
Number of investor countries
Source: ALFI REIF survey 2018
2016 Private Private placement has been the predominant been replaced by AIFMD-authorised institutional
distribution distribution channel for REIFs, but this has now placement in EU countries in most cases.
Private distribution Public distribution
(number of countries where
Luxembourg REIFs are registered)
Source: ALFI REIF survey 2018 Source: ALFI REIF survey 2018
17 Accounting Like last year, 61% of funds surveyed apply standard, with the remainder applying IFRS.
standards Luxembourg GAAP (Lux GAAP) as accounting
Accounting standards
Source: ALFI REIF survey 2018
21Fund units adjusting for various items
Source: ALFI REIF survey 2018
Trading NAV adjustments
Source: ALFI REIF survey 2018
22Accounting treatment of financial instruments
Source: ALFI REIF survey 2018
Deferred taxation treatment
Source: ALFI REIF survey 2018
2318 Consolidated
accounts
Source: ALFI REIF survey 2018
19 INREV NAV
Source: ALFI REIF survey 2018
20 NAV calcu- The majority (55%) of REIFs report a quarterly Since 61% of REIFs are closed-ended, the quarterly
lation frequency NAV calculation, while 23% produce an annual NAV reporting is likely due to investor demand
NAV. Among all the funds surveyed, 45 report a for performance measurement rather than for the
monthly NAV and 22 a semi-annual NAV. purposes of pricing the issue and redemption of
units.
Source: ALFI REIF survey 2018
2421 External fund Fund level valuation*
level valuation
Source: ALFI REIF survey 2018
* This graph covers 62% of surveyed REIFs.
22 Property Almost all (98%) of the surveyed funds use an Valuations for 226 REIFs are carried out under
valuation independent appraiser in respect of their property RICS valuation and appraisal standards. This has
valuations. been the leading standard for property valuations
for years.
Frequency of property valuation Property valuation standards adopted
Source: ALFI REIF survey 2018 Source: ALFI REIF survey 2018
2523 Listing Out of the 304 funds covered in this survey, only 6 One fund reports several listings.
(2%) are listed on the Luxembourg Stock Exchange.
Source: ALFI REIF survey 2018
24 Currency The great majority of funds (82%) report in EUR, slightly up from recent results.
while 12% report in USD and 4% in GBP, both
Source: ALFI REIF survey 2018
2625 Service
providers
Source: ALFI REIF survey 2018
Source: ALFI REIF survey 2018
27glossary
1915 Law Luxembourg Law of 10 August 1915 on commercial companies,
as amended
2010 Law Luxembourg Law of 17 December 2010 on undertakings for
collective investment, as amended
AIFMD Alternative Investment Fund Managers Directive, Directive
2011/61/EU of the European Parliament and of the Council of 8
June 2011
AuM Assets under management
CSSF Commission de Surveillance du Secteur Financier, the
Luxembourg supervisory authority for the financial sector
EFTA European Free Trade Association (free trade area consisting of
Iceland, Lichtenstein, Norway and Switzerland)
Law of 2010 Law of 17 December 2010 concerning undertakings for collective
investment, as amended
EU-28 The 28 member countries of the EU at the date of publication
(Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic,
Denmark, Estonia, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia,
Spain, Sweden, United Kingdom)
FCP Fonds commun de placement: common fund, entity without legal
personality based on contractual agreement
Fund unit For the purposes of this survey, any single-compartment fund and
any active sub-fund in umbrella fund structures
GAAP Generally Accepted Accounting Principles
GAV Gross asset value
HNWI High net worth individual
IFRS International Financial Reporting Standards
Indirect fund A fund that invests in real estate-backed securities or in REIFs
rather than into real estate directly (not a REIF for the purposes
of this survey)
Initiator Organisation that designs the fund structure and manages its
launch
INREV European Association for Investors in Non-Listed Real Estate
Vehicles
Investment style Core: stable income returns, stabilised properties located in
strong and low risk markets; geared at less than 40%
Value-Added: combination of income and capital return;
stabilised properties located in low- to medium-risk markets,
with an element in development or opportunistic investments;
geared from 40% to 70%
Opportunistic: focus on capital return; higher-risk properties (e.g.
28development projects, property repositioning, assets in higher-
risk countries or distressed assets); geared in excess of 60%
IVSC International Valuation Standards Council
Liquidity Closed-ended: REIF may not, at the request of investors,
repurchase directly or indirectly their units or shares
Open-ended: Fund may, at the request of investors, repurchase
directly or indirectly their units or shares
Open-ended with restriction: open-ended and subject to further
conditions such as maximum number of units to be redeemed in
a period; extended notice period; early redemption penalties etc.
Semi-open ended: series of distinct equity offerings after the
initial launch, but not on a continuous basis; ability of investors
to redeem capital at certain times during the fund life; infinite life
LTV Loan-to-value (ratio)
NAV Net asset value
Part II Part II of the 2010 Law
PPM Private placement memorandum or fund prospectus
pps Percentage points: unit for measuring the arithmetic difference of
two percentages
RAIF Reserved alternative investment fund
RAIF Law Luxembourg Law of 23 July 2016 on reserved alternative
investment funds
REIF Real estate investment fund. For the purposes of this survey, this
excludes any indirect real estate funds, such as real estate fund of
funds, (real estate) debt funds and securitisations
RICS Royal Institution of Chartered Surveyors
SA Société anonyme (public limited company)
Sarl Société à responsabilité limitée (private limited liability company)
SCA Société en commandite par actions (partnership limited by
shares)
SCS Société en commandite simple (limited partnership)
SCSp Société en commandite spéciale (special limited partnership)
SICAF Société d’investissement à capital fixe (investment company with
fixed capital)
SICAR Société d’investissement en capital à risque (investment company
in risk capital)
SICAR Law Luxembourg Law of 15 June 2004 on the investment company in
risk capital, as amended
29SICAV Société d’investissement à capital variable (investment company
with variable capital)
SIF Specialised investment fund
SIF Law Luxembourg Law of 13 February 2007 on specialised investment
funds, as amended
SOPARFI Société de participations financières (financial holding company)
SPV Special purpose vehicle
TEGoVA The European Group of Valuers’ Associations
UCITS Undertaking(s) for collective investment in transferable securities
30about alfi
The Association of the Luxembourg Fund Foster dedication to professional
Industry (ALFI), the representative body for standards, integrity and quality
the Luxembourg investment fund community, Investor trust is essential for success in
was founded in 1988. Today it represents more than collective investment services and ALFI thus
1 300 Luxembourg-domiciled investment funds, does all it can to promote high professional
asset management companies and a wide variety of standards, quality products and services,
service providers including depositary banks, fund and integrity. Action in this area includes
administrators, transfer agents, distributors, law organising training at all levels, defining codes of
firms, consultants, tax advisers, conduct, transparency and good corporate gover-
auditors and accountants, specialist IT providers and nance, and supporting initiatives to combat money
communications agencies. laundering.
Luxembourg is the largest fund domicile Promote the Luxembourg investment fund
in Europe and its investment fund industry industry
is a worldwide leader in cross-border fund ALFI actively promotes the Luxembourg
distribution. Luxembourg-domiciled investment fund industry, its products and its
investment structures are distributed in services. It represents the sector in financial and in
more than 70 countries around the globe, economic missions organised by the Luxembourg
with a particular focus on Europe, Asia, government around the world and takes an active
Latin America and the Middle East. part in meetings of the global fund industry.
ALFI is an active member of the European
ALFI defines its mission as to “Lead industry Fund and Asset Management Association,
efforts to make Luxembourg the most of the European Federation for Retirement
attractive international centre”. and of the International Investment Funds
Association.
Its main objectives are to:
To keep up to date with all the news from the asso-
Help members capitalise on industry trends ciation and the fund industry in Luxembourg, join
ALFI’s many technical committees and us on LinkedIn (The Luxembourg Fund Industry
working groups constantly review and Group by ALFI), Twitter (@ALFIfunds), Youtube,
analyse developments worldwide, as well as Vimeo or visit our website at www.alfi.lu.
legal and regulatory changes in Luxembourg,
the EU and beyond, to identify threats and
opportunities for the Luxembourg fund
industry.
Shape regulation
An up-to-date, innovative legal and fiscal
environment is critical to defend and
improve Luxembourg’s competitive position
as a centre for the domiciliation, administration and
distribution of investment funds. Strong relation-
ships with regulatory authorities, the government
and the legislative body enable ALFI to make an
effective contribution to decision-making through
relevant input for changes to the regulatory frame-
work, implementation of European directives and
regulation of new products or services.
31November 2018
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