Today, the 9th of November 2017, the Belgian Act amending the Act of 12 May 2014 on regulated real estate companies (the “Reviewed REITs Act”) was published in the Belgian Official Journal.

Overview and background

In 2014, a new category of regulated real estate company (“société immobilière réglementée”/“gereglementeerde vastgoedvennootschap”) (“SIR”/“GVV”) was introduced through the Act of 12 May (the “REITs Act”)[1]

The Reviewed REITs Act that was published on 9th of November 2017, introduces two important changes, being (i) an extension of the permitted activities of SIR/GVVs to the (public) infrastructure sector and (ii) the introduction of a SIR/GVV with a social purpose (the “Social SIR/GVV”).

Amendment of rules applicable to public and institutional SIR/GVV’s

The Reviewed REITS Act is mostly noteworthy for its extension of the permitted activities of SIR/GVVs to the infrastructure sector. Until today, the business activities of a SIR/GVV were limited to placing real estate at the disposal of others.

The Reviewed REITS act extends the permitted activities of a SIR/GVV to the infrastructure sector, in particular to PPS projects and to investments in the energy, water and waste disposal sector.

Authorised investments in PPS projects include:

  • Design, Build and Finance (DBF) agreements;
  • Design, Build, (Finance) and Maintain (DB(F)M) agreements;
  • Design, Build, Finance, (Maintain) and Operate (DBF(M)O) agreements; and/or
  • Agreements for the concession of public works.

Furthermore, pursuant to the Reviewed REITS Act, the scope of permitted business activities of SIR/GVVs is extended to the projects related to public utilities, energy (electricity, gas, fossil or non-fossil fuels, renewables), water, waste and waste treatment.

By contrast, the list of permitted activities of the FIIS/GVBF will remain unchanged. The FIIS/GVBF is the investment vehicle which was introduced in 2016 (see previous newsletter) to the image of the SIR/GVV but which is specifically designed for real estate investments that are made by one or more institutional and/or professional investors.

New rules to make co-investments more attractive

A further noteworthy change is the abolishment of the obligation for a SIR/GVV to have sole or joint control over the companies in which they hold shares. Instead, the Reviewed REITS Act introduces a minimum participation threshold for portfolio companies of 25%. This additional flexibility is expected to result in a vast increase in strategic cooperation opportunities with SIR/GVVs.

Further amendments include (i) the introduction of the possibility, under certain conditions and subject to thresholds to be set by Royal Decree, for natural persons to hold securities issued by an institutional SIR/GVV, and (ii) new rules relating to the maximum debt ratio and the relative amount of assets subject to collateral.

New category: the Social SIR/GIV

Finally, the Reviewed REITs Act introduces a new category of regulated real estate company, namely with a social purpose (the “Social SIR/GVV”). The activities of the Social SIR/GVV will focus on real estate structures demanded by the social sector, such as care for the disabled, senior housing, children’s care, child welfare, or education in general. The goal of this introduction is to create a broader basis for the financing of these real estate structures by granting them a similar tax treatment as public and institutional SIR/GVVs.

The rules applicable to Social SIR/GVVs are somewhat different from those applicable to public SIR/GVVs; for example, a Social SIR/GVV cannot be listed and Social SIR/GVV’s will be obliged to take on the form of a cooperative company “with a social purpose” (“coöperatieve vennootschap met beperkte aansprakelijkheid met sociaal oogmerk”/”société coopérative à responsabilité limitée à but social”); the realization of a social purpose is key, and the striving for financial gains by the partners is not allowed or restricted (for example, net dividend payments may not be in excess of 6% of the nominal value of the shares; and shares can only be redeemed (not transferred) at their nominal value).

For the most part, the Reviewed REITs Act enters into force at the day of publication.

Certain parts have retroactive effect (as from 16 July 2014).