Changes to the legal framework for specialized real estate investment funds

Over the last few years, the Belgian legal framework for regulated real estate companies and specialized real estate investment funds has evolved quite significantly. The law of 2 May 2019 on diverse financial provisions introduced the latest set of reforms. These legislative changes entered into force as from 1 June 2019.

First of all, the legislative reforms identify a new type of entity that can opt for a statute as a specialized real estate investment fund. Going forward, it will be possible for investment vehicles in which investors, acting collectively, have the daily decision making power or control to opt for the statute as specialized real estate investment fund. This innovation aims to make investments accessible to certain types of partnership structures.

Instead of EUR 1.200.000, the minimum capital for specialized real estate investment funds has been reduced to the amounts as determined in the Belgian Companies and Associations Code. The reduced minimum share capital does however not affect the obligation to hold a total real estate portfolio with a minimum value of EUR 10,000,000 at the end of the second financial year following its registration.

Furthermore, some clarifications have been made with regard to the competence of the supervisory authorities. Specialized real estate investment funds are registered with the Belgian Federal Public Service for Finance (FPS Finance). Once the entity is registered, the FPS Finance will supervise compliance with regulatory provisions. In this context, the FPS Finance can require entities to report on their compliance with regulatory provisions.

Lastly, regulated real estate companies will be able to raise capital in cash without applying an irreducible priority allocation right for existing shareholders if the following two conditions are met cumulatively: (i) the capital increase must be executed within the limits of the authorized capital and (ii) the cumulative capital increases over the past 12 months do not exceed 10% of the capital at the moment the decision to raise (additional) capital is taken.