INREV makes AIFM directive a ‘priority’

The European Association for Investors in Non-listed Real Estate Funds says work on the forthcoming regulation affecting alternative fund managers will be a priority for the organisation this year.

The European Association for Investors in Non-listed Real Estate Funds (INREV) has made the controversial EU Directive on Alternative Investment Fund Managers one its main focuses of work this year.

According to its 2010-2012 Business Plan – seen by PERE – the association says it will deliver a project to “understand the business impact” of the directive, as well as provide updates via its website on changes. It will also focus on the directive during its events and training courses.

The association has 350 members and is mainly for investors, though it has expanded to fund managers and advisors since being established seven years ago.

It says regulatory issues rose up the agenda rapidly for the industry in 2009, with the launch of the proposed EU Directive on Alternative Investment Fund Managers heralding “major changes for the industry.”

It adds: “As such, members’ needs on this topic will be a priority for INREV in 2010. The shift from improving understanding on the directive to supporting implementation will come as the timetable of the directive becomes clearer.”

The work becomes all the more urgent now that EU finance ministers reached general agreement on the directive earlier this month.

Negotiations will next take place between Members of the European Parliament and the Council of Ministers ahead of the first reading vote by the full European Parliament which is scheduled for July 2010.

The directive, which was drafted last year principally with the protection of investors in hedge funds in mind, would catch private equity and private equity real estate fund managers, adding to costs and administrative burdens.

The European Private Equity & Venture Capital Association is among trade bodies to publicly criticise the proposed rules.

It published results of a survey in March suggesting that 67 percent of the world’s most active institutional investors in venture and growth capital funds would either withdraw from venture and growth investment completely or substantially reduce their allocations by over 30 percent if the directive was implemented in its current form.

One of the most controversial aspects is that the directive could limit LPs choice of fund managers.
This is because the rules would prohibit foreign fund managers from marketing within the EU unless they can demonstrate that they are subject to a regulatory regime of equivalent rigour in their home country.

Apart from work on the directive, INREV has three other priorities for 2010; to develop the INREV Index as the leading benchmark for the non-listed property funds industry; to promote the use of the INREV Guidelines as the industry standard, and; to promote a better understanding of the role of sustainability in non-listed property funds.

As part of this, it is working up an Opportunity Funds Index covering “higher risk, return funds”.