The Belgian government is expected to introduce a new fund-vehicle, the Belgian Specialized Real Estate Investment Fund (B-Sreif), that aims at real estate investments and is open for institutional investors.
1) Ratio legis and expected legal framework
The Sreif aims to fulfill the desire of institutional investors for a more flexible and tax efficient vehicle for investing in real estate in Belgium and abroad while acquiring control over their investment.
The existing Belgian real estate investment funds with a beneficial tax regime are lacking flexibility: the “SICAFI” and the “Sociétés immobilières réglementées generally need to be listed on the stock exchange and envisage a long term investment policy.
The Sreif, on the other hand, would not require any listing at the stock exchange, would be accessible for a limited amount of investors, and could be set up for a limited amount of assets, while benefiting a similar beneficial tax regime as the SICAFI and the sociétés immobilières réglementées.
Furthermore, a foreign real estate fund with real estate in Belgium cannot benefit, to date, from the beneficial tax regime of the SICAFI and the Sociétés Immobilières réglementées. The introduction of Sreif would make it possible that the beneficial tax regime of the foreign real estate fund with real estate in Belgium becomes recognized in Belgium. This enhances a non-discriminatory policy compliant with EU law.
The vehicle is expected to be introduced as one of the investment platforms governed by the Act of April 19th, 2014, implementing the Directive 2011/61/EU on Alternative Investment Fund Managers into Belgian legislation.
2) Current outlook
Based on currently available information the Sreif promises to offer an interesting tool for investments in real estate and affiliated products. Some planning, e.g. at the level of real estate transfer taxes (“RETT”), however seems required to avoid drawbacks.
3) Expected Strengths
- The Sreif has a flexible regulatory framework.
- The daily operations are organized in a way similar to common law companies.
- No specific authorizations would be required in the hands of the Sreif. The manager of the Sreif however may be subject to a strict prudential control.
- The Sreif benefits from a special tax treatment:
4) Possible weaknesses
Distributions received from Sreif would not benefit from the dividends received deduction (“DRD”) unless the dividends generate from:
5) Potential opportunities
6) Potential threats
Examples of situations where Sreif could be an interesting tool
Part of the above information, namely the Royal Decree implementing the B-Sreif, is preliminary, has yet to be finalized and may therefore still (materially) change.
The present should therefore be considered as a mere projection without any guarantee as to the final result.