The Hamburg-based specialist fund administrator Intreal is expanding its activities to include the administration of real estate debt funds, in response to growing demand, it says.
The firm will begin to offer real estate loans as an alternative investment fund manager (AIFM) and central administrator through its Luxembourg subsidiary, Intreal Luxembourg. This subsidiary also plans to extend even further the number of its regulatory licenses, including gaining the approval for AIFM licenses for the asset classes ‘real estate funds of funds’ and ‘infrastructure funds’, which are expected to be issued in 2023.
Tim Kiefer, the head of the new business segment, said: “Real estate private debt funds are only a small part of the debt fund universe, but this segment has seen strong growth in recent years. Demand from institutional investors in particular remains high. Growth is ongoing - despite the recent rise in interest rates.”
His colleague Rudolf Kömen added: “For real estate loan funds, Luxembourg is the place to be. Compared to the regulatory regimes of other countries, it is an excellent domicile for setting up funds of this type and the sheer diversity of Luxembourg vehicles provides the necessary flexibility. We are currently in talks with various asset managers who want to launch credit funds with us. I expect the first fund to be launched in Q1/2023.”
The new Luxembourg team will use SAP Loans Management (CML) as an add-on module to its accounting software, which will make Intreal one of the few providers on the market offering a dedicated loan management function and extensive reporting, said Kiefer.
Last month Intreal’s CEO Michael Schneider warned of a slowdown ahead in its classical business of managing funds for third parties. But he said still believed that real estate’s inherent resilience would prove decisive in the face of tougher times ahead.
‘We’ve seen the inflation protection and wealth preservation aspects of real estate being sort of relegated to the background in recent years. With the changed situation now, however, commercial properties in particular with their indexed leases are a reminder that real estate can, to a certain degree, protect you against inflation, and that it offers stable asset value in volatile times while generating continuous cashflows on top of it. And active management is a key prerequisite for making a success of it,’ he said.
He said that not only active management, but the advisory function by companies such as Intreal will become increasingly import- ant as the regulatory environment for funds becomes more complex. From August 2nd, the [[EU Markets in Financial Instruments Direc- tive]] (MIFID II) has come into force, making it now compulsory for fund providers to actively ensure their clients are fully appraised of their degree of sustainability preferences, and to provide them with the appropriate products.
This is not going to be easy, said Schneider, as the product providers have to provide the sales side with the information it needs to accurately match specific characteristics to target buyers’ specifically-defined ESG goals. The complexity of the new regulations, which make distinctions between four sustainability preferences, are simply baffling for a great many investors, he said.
