The German fund administrator and asset manager INTREAL told REFIRE at the MIPIM recently that it saw the real estate market adjusting to reality, and saw a degree of optimism returning to investor sentiment as buying opportunities were now raising their heads.
© INTREAL
Rudolf Kömen, Conducting Officer, INTREAL Luxembourg
Rudolf Kömen, conducting officer (managing director of the Luxembourg branch of the Hamburg-headquartered INTREAL, said he saw transactions picking up in Germany, but German investors themselves were still acting cautiously. Anglo-Saxon investors were quicker to adjust their valuations and react faster to market opportunities, he said, while also being highly nimble in re-entering the market should a favourable situation arise.
We carry a guest column in this issue of REFIRE about ELTIF 2.0, the newest version of the European Long Term Investment Fund, for which Kömen has high expectations. Under the new ELTIF 2.0 regulation, distribution to many more investors is possible, and the funds can also invest more flexibly - property being a prime example. The fund industry is expecting numerous new issues here from which INTREAL can benefit, Kömen said. German and international investors in renewable energies and real estate had already been in touch, he said. Timely, as INTREAL will launch a Luxembourg infrastructure fund this year, to follow up on a hotel fund launched in 2023 - otherwise a terrible year for fund launches, with most investors staying away.
INTREAL, as a service KVG, as had a presence in Luxembourg since 2019, but has really only been ramping up business in the last three years since getting all its necessary licences for administration and fund management, and can now handle much more business from Anglo-Saxon investors and others not able to take full advantage of German tax laws.
The Luxembourg location has several advantages over Germany: It offers highly variable legal forms for investments, greater leeway for the use of debt capital, a broader range of permissible investment opportunities and a flexible approach to EU requirements. The new German Fund Location Act has had little impact in erasing this advantage.
Kömen said the ability to set up and manage property funds from Luxembourg is also important for the asset managers among INTREAL's clients, who want monthly fund reporting in line with German standards for their investors.
There are many other advantages to Luxembourg as a fund location, said Kömen. The country is always very quick to implement European directives and can therefore often benefit from a first- mover advantage. Furthermore, unlike in Germany, the EU requirements have almost always been implemented one-to-one without a time-consuming legislative process.
Another good example of intelligent structures and creativity in fund legislation is the RAIF (Reserved Alternative Investment Fund). This allows a regulated AIFM to set up an alternative investment fund that is not subject to financial supervision directly, but indirectly via the AIFM. This means that an authorisation procedure with the Luxembourg supervisory authority Commission de Surveillance du Secteur Financier (CSSF) is not necessary before the fund is launched. The RAIF was introduced in 2016 and has been a huge success. There is no comparable investment vehicle in the EU. The RAIF can be marketed to authorised investors outside Luxembourg with an EU passport - a notable advantage.
