luxembourg, the ideal platform for · pdf fileher advisory skills comprise financial...

LUXEMBOURG, THE IDEAL PLATFORM FOR INTERNATIONAL !REAL ESTATE INVESTMENTS!

IT’S ALL ABOUT LOCATION!

Catherine Rückel, Moderator Partner | German Business Group Leader Luxemburg PwC 400, route d’Esch, L-1014 Luxembourg Telephone: +352 494848 - 2137 Email: [email protected] Homepage: www.pwc.com !!

It’s all about location: Luxembourg, the ideal platform for international real estate investments ! ! !6 October 2014! 2!

Curriculum Vitae!Catherine Rückel!

Catherine is heading the business development for the German Business Group and the “Asset Management Real Estate German Market”. As an audit partner she works with international investment funds and real estate companies of German origin in Luxembourg. She was involved in the implementation and structuring of investment funds regarding tax and audit issues for many years. She has a profound experience in the domain of real estate funds for German investors, especially regarding Family Offices and institutional investors. Her advisory skills comprise financial accounting according to Lux GAAP and IFRS and the assistance of clients during the foundation/set-up phase in all aspects of structuring and functional questions for open-ended or closed-ended fund structures. With over 2,300 professionals at your service, PwC Luxembourg is not only the largest professional services firm in the country, but also a centre of excellence for investment and real estate management within the PwC Network. Our Real Estate and Infrastructure Team comprises more than 250 experts of which 40 are partners and directors.

3!

Curriculum Vitae!Pierre Kreemer!

Pierre Kreemer Tax Partner | Real Estate & Infrastructure Leader, Luxembourg KPMG 9, Allée Scheffer L-2520 Luxembourg Telephone: +352 22 51 51 - 5502 Email: [email protected] Homepage: www.kpmg.lu !

Pierre has over 20 years experience in diversified international tax advisory services. He joined KPMG Tax in 1993 and also worked for the former trust division of KPMG. He was promoted partner in October 2006. He leads the Real Estate & Infrastructure Tax Group since 2009 and KPMG Luxembourg Real estate & Infrastructure Line of Business since 2012. Pierre has an International Corporate Tax background and is regularly involved in large transactions and reorganisations for high level international client base with a focus on corporate reorganisations and the structuring of real estate / infrastructure funds (both regulated and unregulated) and transactions. Since the crisis in 2009 he also leads several initiatives on the restructuring / work outs of distressed real estate funds and also assist in the set-up of debt funds. He is also part of the international team of KPMG servicing pension funds and sovereign wealth funds. He is also closely involved in analyzing the tax aspects of the EU AIFM Directive.

He speaks French, English and German.

He is member of the INREV Tax Committee and co-chairs the Strategy Working Group for Real Estate of the Luxembourg Investment Fund Association (ALFI) and is an active contributor to the ALFI real estate training courses.

It’s all about location: Luxembourg, the ideal platform for international real estate investments ! ! !6 October 2014!

Dr. Marcus Peter, LL.M. eur. Partner | Head of Private Equity and Alternative Investment Funds Bonn & Schmitt 22-24, Rives de Clausen L-2165 Luxembourg Telephone: +352 27 855 - 302 (direct) Email: [email protected] Homepage: www.bonnschmitt.net !

4!

Curriculum Vitae!Dr. Marcus Peter!

Marcus is partner at Bonn & Schmitt, having joined the firm in 2004. Born in Germany, he was admitted to the German Bar in 2004 and the Luxembourg Bar in 2005. He attended high school in the United States for a year and studied law in Germany (obtaining a Ph.D. and LL.M. on European law). In addition, he studied at a Russian university (Rostow-na-Donu) and worked for a German and a Swiss law firm in Moscow before joining Bonn & Schmitt in Luxembourg. Marcus Peter is co-heading Bonn & Schmitt’s Investment Management & Private Equity department. He is supervising the firm’s teams dealing with alternative investment fund structures (real estate, infrastructure, hedge funds, private equity, debt funds etc.). He is also assisting the other co-head of the department, Corinne Philippe, pertaining to UCITS fund structures.


Adrian Aldinger Senior Associate | Private Equity & Real Estate Arendt & Medernach 14, rue Erasme L-2082 Luxembourg Telephone: +352 40 78 78 - 947 Email: [email protected] Homepage: www.arendt.com

!

5!

Curriculum Vitae!Adrian Aldinger!

Adrian is a senior associate in the private equity & real estate practice of Arendt & Medernach where he advises clients on the legal, corporate and regulatory aspects of alternative investment fund structuring/formation and related transactional work. He has been a member of the Berlin Bar (Germany) since 2010 and has been admitted by the Luxembourg Bar to practice in Luxembourg under his German professional title. He is a German qualified lawyer, who studied law in Erlangen and Berlin. Adrian Aldinger holds the German first (2007) and second (2009) state exam in law. He is also founding member and vice-chairman of the German–Luxembourg Lawyers’ Association. Languages: English, French and German.


6!

Real Estate Funds in Luxembourg - Statistics!Luxembourg – an attractive place for real estate structures!

6.00! 4.13! 3.85! 3.21! 1.84! 1.73! 1.17!

14.50!14.84!

17.58!21.10! 24.08!

28.74! 29.95!

0.00!

5.00!

10.00!

15.00!

20.00!

25.00!

30.00!

35.00!

2008! 2009! 2010! 2011! 2012! 2013! 2014!

EUR

Bill

ion!

SIF, Specialised Investment Fund Law of February 2007 !Part 2 Funds - 2002 Law /2010 Law!

21! 16! 15! 13! 27! 27! 27! 23!

83! 109!135!

166!183!

208!252! 280!

36!42!

46!

46!

56!60!

50!51!

0!

50!

100!

150!

200!

250!

300!

350!

400!

2007! 2008! 2009! 2010! 2011! 2012! 2013! 2014!N

umbe

r of R

eal E

stat

e Fu

nds!

SICAR * !SIF, Specialised Investment Fund Law of February 2007!Part 2 Funds - 2002 Law /2010 Law!

Source: CSSF July 2014 (*SICAR Estimation)

AuM RE Funds # RE funds/ SICAR


7!

Real Estate Funds!The INREV Universe!

Source: INREV Vehicle Universe Q2.2014 – August 2014


8!

Real Estate Funds!The INREV Universe!


• Many funds are reaching maturity or are being wound up

• Investors are looking for new investments in the current low interest rate environment

• Initiators seek for substitute products

• Potential for new business


9!

AIFMD – Current state of implementation!AIFM Licenses by Key European Asset Management Hubs!

706!

263!

70! 64!131!

750!

270!

100! 85!

220!

0!100!200!300!400!500!600!700!800!

UK! France! Germany! Ireland! Luxembourg!

AIFM Licences (granted - approximately)!AIFM Licenses (exp. end 2014)!

Sources: National Regulators, EFAMA, PwC


10!

AIFMD – New Structures available!

o  complete overhaul of the common limited partnership (SCS - CLP)

o  creation of the special limited partnerships (SCSp - SLP)

o  modernisation of the corporate partnership limited by shares (SCA)

Objective?

o bridges the gap with Anglo-Saxon LP structures

o offers solution to German initiators and managers


Setting the scene!

What?

11!

AIFMD – New Structures available!Luxembourg Limited Partnerships!

1! 1!16! 17! 21!

69!

88!105!

123!

148!

182!

208!

240!251!

3!11! 13!

21!28!

46!53!

64!75!

91!101!

116!126! 130!

0!

50!

100!

150!

200!

250!

300!

Nbr companies SCSp!Nbr companies SCS!


AIFMD – New Structures available!

SLP

High Confidentiality

Flexible governance

Contractual flexibility

No legal personality but domicile

Full tax transparency

Ring-fencing


Special Limited Partnership – Key features!

§  SCS and SCSp are commercial companies with and without legal personality, respectively (partnerships)

§  Limited number of legal requirements (voting, economic rights and corporate governance)

§  SIFs and SICARs can be set up as limited partnerships (with variable capital)

§  Cash or contribution in kind is possible (even as a service) §  Interests may take the form of units §  Transfer and redemption of interests are covered by the limited

partnership agreement §  Issue and redemption of units are not necessarily processed at

NAV price §  Register of the limited partnership and limited partner’s identity

are not required to be published §  Management by GP or third party administrator (never by limited

partners) §  Limited partners can perform (without loss of limited liability)

internal administrative tasks such as advisory, monitoring and supervision activities.

§  A personal creditor of a partner has no direct claim against the assets of the SCSp

§  Tax transparency

13!

AIFMD – New Structures available!Luxembourg Limited Partnerships!

General Partner

Limited Partner!Investors!

Interest(s) of the General Partner(s)!

Interests or Debt Instruments!

SCS(p)!

SPV!


Structuring Example (Real Estate Fund)

Real Estate SIF-FCP

Depositary Bank

Luxembourg

Compartment EUR

Luxembourg Chapter 16 Management Company

(and AIFM)

Unitholders

Units Investment

Manager

(ex-Lux Possible)

Appoints

Central

Administrative & Transfer and

Registrar Agent

(Luxembourg)

Compartment CHF Compartment USD

Commercial RE in EUR countries

Commercial RE in Switzerland

Commercial RE the USA

Property Manager

(ex-Lux

Possible)

Appoints


Structuring Example (Debt Fund SIF)

Debt Fund SCS, SIF

Depositary Bank

Luxembourg

Compartment EUR (Acquired Loans)

General Partner

(Luxembourg, e.g. SARL)

Limited Partners

Limited Partner Parts

Investment Manager

(ex-Lux

Possible) Appoints

Central

Administrative & Transfer and

Registrar Agent

(Luxembourg)

Compartment (New Loans)

Acquisition of Existing Senior Loans Financing Commercial and Retail

Real Estate

Appoints

Granting of Original New Senior Loans Financing Commercial and Retail

Real Estate


16!

Luxembourg Tax Update!Tax Treaty Network – Status as at 15.09.2014!


Generic Real Estate Structure for foreign investors!

General •  Tax transparency and tax neutrality at the level of

Luxembourg LP.

•  Investments to be organized via a two tier Luxembourg feeder structure involving Lux LP as sole shareholder of LuxHoldCo, a Luxembourg fully taxable company.

•  LuxHoldCo can further grant loans to various SPVs.

•  Double Tax Treaty access and Participation exemption at LuxHoldCo level.

•  The funds to be provided to Lux LP can be denominated in USD whereas Lux LP can provide EUR denominated funds to LuxHoldCo and Lux LP can opt for USD functional currency.

•  Instead of a Luxembourg Limited Partnership, specific Luxembourg feeder fund vehicles (regulated or not) can also be implemented as well as a direct investment in LuxHoldCo.

!

Investor(s)!

100%

LuxHoldCo

!SPVs!!

100%

Luxembourg

Other jurisdictions

Lux GP

< 5%

Lux LP (SIF)

!SPVs!!!

SPVs!!


18!

Structure for investment in French real estate!


Investors!

100%

LuxHoldCo

!French OPCI!

!

100%

Luxembourg

France

Lux GP

< 5%

Lux LP

!French Management

company!!

19!

Structure for investment in Spanish real estate!

Investors!

100%

LuxHoldCo

!Spanish SOCIMI!

!

100%

Luxembourg

Spain

Lux GP

< 5%

Lux LP

LuxSubCo


20!

Key reasons for choosing a Luxembourg over a German fund vehicle!


1.  Luxembourg is a well-known location for structuring investment

funds and therefore very appealing for international investors

2.  A Luxembourg Specialized Investment Fund (SIF) has no restriction in regard to the financing of interim holding companies or property companies whereas a German fund may only finance directly property companies with a limitation of 50% of debt funding. Therefore, the Luxembourg SIF provides all flexibilities to structure real estate investments in a tax efficient manner, giving regard to foreign tax requirements.

3.  Equal to Luxembourg contractual funds, a German fund would be a flow through in case of foreign investments (and based on the assumption that the investors are not resident in Germany). However, the German fund would in most cases not be able to access treaty benefits. A Luxembourg SIF structure in the form of an FCP may benefit from tax treaties when structuring investments via a Luxembourg SOPARFI.

21!

Example - Luxembourg investment structure!


Luxembourg or !local PropCo!

ForeignCo!!

IBL

Luxembourg or foreign property

SIF (FCP)!!

Lux SCS!!

German property

Investors!

Lux ManCo!

IBL Lux MasterCo!

Tracking financing instrument!

22!

ELTIF!

No early redemption rights for investors – no potential conflicts of

interests between exiting and remaining investors. Listing possible.

Follows the tried-and-tested UCITS approach on product specifications and risk spreading, specific rules on

conflicts of interest, increase transparency (costs), limited use of

derivatives and leverage.

Eligible assets: Min. 70% in long-term investments:

infrastructure projects, unlisted companies (mainly SMEs);

investments in real estate assets (buildings or direct purchase of an

infrastructure asset) ELTIF, EuVECA oder EuSEF.

Available Q1/2015


Close-ended EU AIF with

'second retail passport‚

Long-term investment capital in order to finance tangible assets (energy, transport and communication infrastructures, industrial and service facilities, housing and climate change and eco-innovation technologies), intangible assets (education and research and development).

“Retail ELTIFS”: No preferential treatment or specific economic benefits

granted to individual investors or groups of

investors, not structured as a partnership.

ELTIF European Long

Term Investment

Funds

23!

Real Estate Funds in Luxembourg - Statistics!Luxembourg – The place to be!

•  On European level Luxembourg is ranked №1.

•  Target Investors of Luxembourg funds are in general not domiciled in Luxembourg.

•  Germany, UK and the Netherlands focus the launch of their funds more on the national market.

Luxembourg - „The place to be“:

• For international real estate portfolios

• Distribution to institutional investors from different countries

• But also for investors with specific regulatory requirements („Versorgungswerke“ and „Unterstüzungskassen“)



•  Luxembourg should continue to be attractive as a real estate fund location.

•  One should avail of creativity and stability as both attract productive and visionary minds. This is what you will find in the Luxembourg fund universe – become a part of it and start benefitting.

•  Luxembourg is ideally positioned to ride the regulatory tidal wave now and in the future.!

•  We are looking forward to welcome you in Luxembourg!!

24!

Why Luxembourg?!


Thank you for your attention.!!!

25!It’s all about location: Luxembourg, the ideal platform for international real estate investments ! ! !6 October 2014!

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