The Belgian Act of 12 May 2014 on regulated real estate companies (the “REITs Act”) was published in the Belgian Official Journal today.

The complete text of the REITs Act can be found here.

Overview

The REITs Act follows the recent publication of the Belgian Act of 19 April 2014 on Alternative Investment Fund Managers (the “AIFM Act”)1. The REITs Act introduces a new category of regulated real estate company (“société immobilière réglementée”/“gereglementeerde vastgoedvennootschap”) (“SIR”/“GVV”) which will not fall under the scope of the AIFM Act.

For the purposes of the REITs Act an SIR/GVV is (i) a company incorporated for an unlimited duration, (ii) whose business activity is exclusively the placing of real properties at the disposal of users (i.e., for their purposes of these users’ raising, renovating, developing, acquiring, selling, managing and exploiting of real properties) and, as the case may be and within the limits set forth in the REITs Act, the holding of real estate certificates, shares or units in real estate investment companies or funds, and (iii) is licensed as such by the Financial Services and Market Authority (“FSMA”).

The SIR/GVV must pursue a business strategy enabling it to hold its real properties on a long-term basis. When exercising its activities the SIR/GVV must focus on active management, which implies that it must, amongst other things, exercise its activities by itself without the possibility of delegating them to third parties.

The REITs Act distinguishes between two types of SIR/GVV:

  • public SIR/GVV, whose shares are admitted to trading on a regulated market, and it raises capital by means of a public offer; and
  • an institutional SIR/GVV, which is under the exclusive or joint control of a public SIR/GVV, and it raises capital solely from eligible investors acting on their own behalf and whose securities may only be acquired by such investors.

The REITs Act lays down rules regarding conditions for authorisation (such as governance, management structure, organization, real estate expert, etc.), operational conditions (inter alia risk management, remuneration, conflicts of interest, insurance coverage, prohibitions, inventory and valuation, periodic information, accounting rules), and supervision which are largely similar to the rules that applied to existing closed-end real estate investment funds (“sicafis”/“vastgoedbevaks”) before the AIFM Act’s entry into force .  

Pursuant to the REITs Act, the existing closed-end real estate investment funds (“sicafis”/“vastgoedbevaks”) will have the option of converting itself into an SIR/GVV within four months after the REITs Act enters into force, as a result of which they will avoid falling under the scope of the AIFM Act while maintaining the benefit of the existing tax regime forsicafis/vastgoedbevaks. It is important to note in this respect that the REITs Act gives an exit right for shareholders who vote against the adoption of the new SIR/GVV status during the shareholders' meeting whereby such shareholders can request the real estate investment company to buy back up to €100,000 of its shares.

Entry into force

The date of entry into force of the REITs Act will be set by Royal Decree (which is yet to be published).