Benelux Real Estate Insights

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02 Introduction 03 Green Taxes Benelux Real Estate Insights 05 New EU VAT rules and reporting obligations 08 Impact of AIFMD on Luxembourg August 2010 real estate vehicles 11 The future of real estate financing in the Benelux Contents 13 Model for valuation of investment properties under construction 17 Will the proposed lease accounting rules affect your business? 19 Tax update: Belgium 20 Tax update – Luxembourg 21 Our Real Estate Insight series 22 Recent publications Benelux Real Estate Insights

Introduction

Following first signs of recovery German Open-ended funds have billions • The proposed AIFM directive has • Based recently changed IFRS in the second half of 2009, of Euros to spend and allocations by potential consequences to real estate accounting rules development investment volumes continue to institutional investors to non-listed real funds. In this issue we cover the properties need to be valued at estate is increasing. The latter triggering latest developments on the AIFMD fair value as per 1 January 2009. increase in 2010 in the Benelux new pan-European and single country and the potential consequences for In our article we describe various region. Private investors and fund initiatives of various fund managers. Luxembourg real estate vehicles. approaches on how to determine the German funds have dominated In this issue of Benelux Real Estate fair value of these projects. the Benelux markets. Investment Insights we ask your attention for a • Significant changes are expected number of developments relevant to the in lease accounting for lessees • Investors should be aware of the volumes are still far from the real estate industry in the Benelux region. following the publication of a revised VAT rules as per 2010 that peak in 2007. This is caused by Specifically on the regulatory side there discussion paper by the accounting impose new reporting obligation. the scarcity of income producing are important developments to report on bodies IASB and FASB. These In this issue we have summarised prime assets which is the main of which the following have been covered changes may impact tenant behaviour. the changes and provided points in this issue: of attention for existing real estate focus of investors and their investment structures. financers in today’s market. Despite general economic How green is the tax environment for real recovery supported by positive estate in Belgium and the Netherlands? In this article we discuss the effectiveness first quarter results of many of the Dutch and Belgian tax regimes in leading businesses, there is stimulating the reduction of the carbon still significant concern on the footprint of buildings. occupier market. The gap between Jeroen Elink Schuurman prime and non-prime is widening. Real Estate Industry Leader PricewaterhouseCoopers (Netherlands)

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Green Taxes

How green is the tax environment Reducing carbon emissions has become immobilier) for energy-efficient buildings There are also green incentives both for the real estate sector in a key priority for governments all over which are new or which have been built in Belgium and the Netherlands for Belgium and the Netherlands? the world as a result of international up again after complete demolition. A energy-saving investments in buildings. commitments and widespread consensus building’s energy-efficiency (E-level) is For Belgian corporate tax purposes, on the harmful consequences of global measured by an independent expert energy-saving investments (mentioned warming. Buildings are considered to appointed by the Flemish Region. in a limitative list) such as insulation, be responsible for not less than 40% solar cells and high efficiency boilers of total carbon emissions and not For buildings with an E-level of E70 give entitlement to a so-called increased surprisingly regulators have started or lower, the property tax reduction is investment deduction (subject to a imposing disclosure of a building’s currently 20% of the property tax due number of formalities such as a tax energy performance as well as minimum and applies for 10 consecutive years. certificate). This deduction from the standards. Tax regulations may also The reduction is increased to 40% for taxable basis comes on top of the contribute to stimulating sustainable and buildings with an E-level of E40 or lower. deduction of the normal depreciation energy-efficient buildings. Which green The 10-year period starts in the tax year costs and thus represents a pure tax tax regulations are currently of relevance following the year in which the E-level deduction. For investments in financial for the commercial real estate sector in has been granted. In case the labelled year 2010 (corresponding to assessment Belgium and the Netherlands? building is transferred, the reduction is year 2011), the one-off investment also available in the hands of the new deduction is 13.5% (for budgetary Taxes on energy for heating or operating owner (until the end of the 10-year reasons the amount of the deduction has buildings (or exemption of such taxes on period). Contractually, these property been reduced from 15.5% for the year green energy) and taxes on waste water taxes are typically at the charge of the 2009). In case the company is not tax- and water usage obviously stimulate lessee, but low property taxes should paying, the unused part of the deduction efficient use of natural resources and obviously contribute to higher rents (and in a given year is carried forward in time should favour sustainable buildings. represent an important element in the and amount; the effective use of such Such taxes exist in one or the other form negotiation of so-called green leases). It carried-forward amount in a given year both in Belgium and the Netherlands and is in our view rather likely that the other is however limited (for the year 2010 qualify as indirect taxes. two Belgian regions will also start making the amount is limited to €858,330 or to their property taxes greener to stimulate 25% of the investment, whichever is the Typical real estate taxes are local property green buildings. Please note that in the higher). The investment deduction in taxes that are in principle due by the Netherlands there is also a yearly property practice can also be applied to real estate owner. In Belgium these taxes are levied tax (OZB-belasting) due at the communal which is rented out and is therefore also at the regional level (Flemish, Walloon and level. Although each municipality is of interest to the professional real estate Brussels Capital region). Interestingly, the entitled to determine its own tariffs investor. Flemish Region currently offers a property for property taxes from owners and tax reduction (vermindering onroerende users, currently these tariffs do not vary voorheffing / réduction précompte depending on energy performance levels. Continued 3 Benelux Real Estate Insights

Green Taxes

In the Netherlands, there is a distinction For the MIA, qualifying assets are pollution) may qualify for accelerated or costs related to polluted land reduce the to be made between the Energy divided into various categories, even voluntary depreciation. Investors taxable basis for the 12.5% transfer tax. Investment Allowance (EIA) and the based on the extra costs for investing may thus generate for example greater Environmental Investment Allowance in environmentally-friendly assets, deductions in the earlier years of the The above examples show that both (MIA). The EIA (energie-investeringsaftrek) compared to a more conventional life of an asset, and this represents a in Belgium and the Netherlands tax scheme offers a fiscal advantage solution. The percentages are 60%, 50% cash flow and interest advantage. Used regulations exist to stimulate the efficient for investing in sustainable energy and 35% depending on the category, and assets and assets exceeding EUR use of natural resources in buildings and certain types of energy-saving these rates may be increased later on 25 million do not qualify. Also here, a (and thus minimize carbon emissions), assets, whereas the MIA applies to approval of the European Commission. number of formalities (reporting to the sustainable constructions and clean land. environmentally friendly assets and tax authorities) have to be observed. Free On the other hand, one can hardly speak professional environmental advice. The The application of both schemes depreciation is recaptured if the asset today of a true green tax environment for fiscal benefit of EIA corresponds to a is subject to a number of further is disposed within five years after the the real estate sector in these countries. deduction from profit before tax (on top requirements such as timely reporting beginning of the calendar year in which However, given the carbon footprint of of normal depreciation allowances) equal to the tax authorities (i.e. within three the investment was made. It is important today’s buildings and their significant to 44% of the total amount of qualifying months from entering into obligations), to note that buildings that are rented out contribution to global warming, this may energy investments in a calendar year. a written request and a statement from do not qualify and therefore this benefit is change in the near future. The deduction is available if a separate the Minister of Economic Affairs that only available to certain owner occupants qualifying corporate asset costs at least the investment qualifies for tax relief. (the professional real estate sector is Maarten Tas €450 and the total amount of energy The tax benefits are recaptured if the thus excluded in practice). Please note Director, Tax PricewaterhouseCoopers investment per calendar year exceeds asset is disposed of within five years that in Belgium there are no deviating tax (Belgium) €2,100. Maximum deduction is reached after the beginning of the calendar year depreciation rules for environmentally- if the qualifying investments amount in which the investment was made. A friendly investments. Hein Vermeulen to a total of €115 million per calendar change in nature or use of the asset in Senior Manager, Tax year. Only new corporate assets that a way that the asset no longer qualifies As mentioned above, land improvement PricewaterhouseCoopers (Netherlands) enhance energy saving (used assets are for the investment deduction is deemed costs that are capitalised may under excluded) and investments listed in the to be a disposal, which may result in the certain conditions benefit from the above so-called Energy List or meeting certain recapture. In addition, the deduction is investment tax schemes (both in Belgium energy performance criteria as set out recaptured if the asset is not put into use and the Netherlands). In addition, the in the Energy List qualify. Non-qualifying within 12 months after the investment Flemish Region currently applies (under investments include, amongst others, was made and less than 25% was paid, certain conditions) a zero transfer tax rate land (except for improvement of land), or if the asset is not put into use within (instead of the 10% normal registration dwelling houses, vessels, assets acquired three years of the investment. duty rate) for transfers of developed from related parties or mainly used by or underdeveloped land qualifying as non-resident companies or permanent In the Netherlands, certain investments brownfields. In the Walloon Region, the establishments outside the Netherlands. that help to protect the environment legislator has stipulated that certain (e.g. reduce or prevent waste, noise and costs such as study costs or clean-up 4 Benelux Real Estate Insights

New EU VAT rules and reporting obligations

Modernisation of taxation rules As of 1 January 2010, new rules Services that – for VAT purposes – qualify But this simplification is somewhat offset leads to simplification of the governing taxation of services have as connected with real estate are in any by a new reporting obligation. As of payment of VAT but also imposes been implemented in EU VAT legislation case the rental and maintenance of real 1 January 2010, EU service providers and local VAT legislation of EU Member estate and brokerage services. It depends need to provide their tax authorities a new reporting obligation. States. The new changes should simplify on the local interpretation of EU Member with a sales list of those services that the application of VAT rules but may also States whether or not other services fall under the new general place of lead to new VAT costs and additional fall within the scope of this exception. taxation rule and that are subject to VAT administrative burdens. Previous Belgian VAT legislation under the reverse charge mechanism contained a list of 11 different types of in the customer’s country (where the New rules in short services that, for VAT purposes, were customer is also established in the EU). deemed to be connected with real estate. The listing should include the value of Under the new general place of taxation As of 1 January 2010, this exhaustive list the supplies and the country codes and rule, most cross-border services between no longer exists. VAT numbers of customers. Exceptions VAT taxable persons (business-to- to the listing obligation are services that business ‘B2B’ services) are taxable Whether or not the reverse charge are VAT exempt in the country where in the country where the customer (EU mechanism is applicable to services the customer is established, or services and non-EU) is established. Under the that fall within the scope of an to a customer who does not need to be previous rule, this was only applicable exception rule depends on local VAT registered for VAT purposes. Services to a limited list of services, for example legislation too. As an example, Dutch connected to real estate do not need to consultancy or financial services. VAT legislation provides for the reverse be listed as these do not fall under the charge mechanism to apply to services new general place of taxation rule. In addition, EU countries are obliged connected with real estate located in to apply the so-called ‘reverse charge the Netherlands, where the supplier is VAT return forms contain some new mechanism’ to B2B services that fall not established or does not have a fixed entries, for example a box where within the scope of the new general rule. establishment for VAT in the Netherlands taxpayers should now specify the value Under this mechanism, the liability to pay while the recipient of those services is of VAT exempt services received from VAT shifts from the service provider to the established in that country. Luxembourg foreign EU service providers (in case the customer, who needs to self-account the VAT legislation however does not provide place of taxation of those services is in a VAT in his VAT return. for application of the reverse charge taxpayer’s country of establishment). mechanism in such case (see overview 1). As was already the case under previous For foreign VAT incurred, a new electronic EU VAT legislation, there are still some The wider application of the reverse refund claim procedure should lead to exceptions to the general rule. For charge mechanism means that there are shorter timeframes for processing and example, services connected with real fewer cases where a business is charged payments. As of 1 January 2010, claims estate continue to be taxable in the with foreign VAT, which it needs to country where the real estate is located. recover via a time-consuming procedure. Continued 5 Benelux Real Estate Insights

New EU VAT rules and reporting obligations should be filed with tax authorities in liable to self-account VAT in its country of The new reporting obligations not only both a cross border and a local context. the country of establishment instead of establishment for management services require adjustment of internal ERP It can be expected that tax authorities will with foreign tax authorities. Local tax (sensu stricto) received from the US systems but also knowledge about the strongly monitor the correct filing of sales authorities will forward claims to foreign parent company, where no (Belgian, status of the customer (VAT registered listings. If not yet done, it is, therefore, VAT authorities, which must respond Dutch or Luxembourg) VAT was due business or not) and the VAT treatment important to take action as soon as within four months. before. The new rules could thus lead of services in the countries where the possible. to an extra cost in case the subsidiary customers are established. Due to the Impact for the real estate industry cannot fully recover this self-accounted different interpretations of EU legislation • review of existing structures, contracts VAT. by Member States, the new sales and service flows Barring the exceptions to the general listing could be a complex and tricky • identify transactions affected by the rule, businesses have to self-account The changes do not impact the place exercise. The mentioning of a customer new rules for VAT in the country where they are of taxation of consultancy and financial by a service provider on the sales listing • identify VAT status of clients established for most services purchased services, the hiring out of personnel, suggests that the customer is liable to • determine required systems and from abroad. Relevant changes for the business-to-consumer ‘B2C’ services ‘reverse charge’ VAT in his country. The accounting changes real estate industry can relate to the (with some exceptions) and services customer, however, may well qualify the • identify efficiencies and planning place of taxation of intermediary services, relating to real estate, nor the application service as VAT exempt. Such divergence opportunities services by merchant and investment of the exemption on financial services will lead to questions from tax authorities • reconsider VAT obligations in other EU bankers, the recharge of bundled (including services to investment funds) and may even result in a reassessment, Member States costs and management services. For and the exemption for real estate as well as more difficult or even spoiled example, a Benelux business is now transactions. relationships with clients and/or service Marie-Isabelle Richardin providers. Director, Tax PricewaterhouseCoopers (Luxembourg) As tax authorities across the EU are committed (and legally obliged) to Brian Adams spontaneously exchange information Partner, Tax PricewaterhouseCoopers included in listings, they can better (Netherlands) identify if a local company receives services from a service provider in Manuel Van der Veken another EU country and, consequently, Senior Manager whether this company is liable to pay PricewaterhouseCoopers (Belgium) local reverse charge VAT on those services.

Local authorities in Benelux have introduced measures to ensure that VAT is properly paid, collected and reported in 6 Benelux Real Estate Insights

New EU VAT rules and reporting obligations

Services connected with real estate Belgium Netherlands Luxembourg before 2010 as of 2010 before 2010 as of 2010 before 2010 as of 2010 Place of taxation country of real estate country of real estate country of real estate country of real estate country of real estate country of real estate Reverse charge mechanism* Yes* Yes* Yes** Yes** No No Conclusion Difference between countries regarding reverse charge mechanism, before and as of 2010 No change in place of taxation and reverse charge mechanism as of 2010, for all countries

Management and administrative services *** Belgium Netherlands Luxembourg before 2010 as of 2010 before 2010 as of 2010 before 2010 as of 2010 Place of taxation country of supplier country of customer country of supplier country of customer country of supplier country of customer Reverse charge mechanism N/A Yes N/A Yes N/A Yes Conclusion No difference between countries regarding place of taxation and reverse charge mechanism, before and as of 2010 Change in place of taxation and reverse charge mechanism as of 2010, in all countries

Advisory services Belgium Netherlands Luxembourg before 2010 as of 2010 before 2010 as of 2010 before 2010 as of 2010 Place of taxation country of customer country of customer country of customer country of customer country of customer country of customer Reverse charge mechanism Yes Yes Yes Yes Yes Yes Conclusion No difference between countries regarding place of taxation and reverse charge mechanism, before and as of 2010 No change in place of taxation and reverse charge mechanism as of 2010, in all countries

* Where the supplier is not established or does not have a fixed establishment for VAT in the country where the real estate is located, while the recipient of those services is registered for VAT and filing regular VAT returns in this country. In Belgium real estate is sometimes held by either a foreign entity directly or a real estate company (not filing regular VAT returns), reverse charge will not systematically apply. ** Where the supplier is not established or does not have a fixed establishment for VAT in the country where the real estate is located, while the recipient of those services is established in this country *** Sensu stricto, not including: - management of special investment funds - property management

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Impact of AIFMD on Luxembourg real estate vehicles

This article provides an update on Latest developments and position on the AIFM Directive, meaning Scope the latest developments around timeframe negotiations will now start in an effort the draft EU Alternative Investment to get the Directive adopted after the All drafts seek to regulate the managers The initial draft of the Directive produced summer break. of alternative investment funds, and no Fund Managers Directive (AIFMD) by the European Commission on 29 April distinctions or specific exclusions are and analyses its impact on real 2009 has become subject to extensive The proposals agreed by ministers made for real estate funds. Regardless estate funds in Luxembourg. At discussion at the European Commission, and parliamentarians, however, have of which draft is ultimately implemented, this stage, it is difficult to assess Parliament and Council of Ministers as significant differences. it is highly likely that real estate funds the legislative process develops. The in Luxembourg, both regulated and the exact consequences of the European Parliament’s ECON (Committee The parliamentary view is less unregulated, will be subject to a more Directive for managers of real on Economic and Monetary Affairs) restrictive and limiting with regards to, comprehensive regulatory regime than estate funds and their business issued a Rapporteur’s draft report (the e.g., third-country issues and depository currently. This means that any fund operations, due to multiple ‘Parliamentary Draft’) in November 2009. liabilities, than the Council view. manager that manages or markets an The Swedish Presidency has issued The next few months continue to be FCP or SICAV already regulated under the uncertainties in the way the draft its final compromise position report on crucial to define the parameters of 2007 SIF regime – or a SICAR under the text is evolving. the Directive on 15 December 2009 those discussions as the Council and 2004 regime – is within the scope of the (the ‘Swedish Compromise’). Spain, the European Parliament try to lock draft Directive. Furthermore, even “Part which took over the rotating presidency down their respective positions to give II” retail-type funds – those not qualifying from Sweden, issued in January 2010 themselves robust platforms for the for the UCITS regime – are caught. its list of areas of contention, based negotiations. A second reading and the The only escape would be for a fund on the Swedish report. These three plenary vote may be delayed to late manager that is already a management current drafts of the Directive vary autumn in case of significant differences company or investment company of a significantly regarding some of the core of view between the Presidency and the UCITS FCP, SICAV or other fund with issues, although there are also areas of Parliament. Afterwards the Directive will UCITS status. Currently these non-UCITS convergence. The European Parliament, need to be transcribed into national law regulated fund vehicles are subject to the Council of Ministers and the during a two year period. The AIFMD regulation of a lighter type. Unregulated European Commission will need to find a is expected to become effective from non-Luxembourg fund entities, which compromise acceptable to all. summer 2012. often have holding and financing vehicles located in Luxembourg, are expected European finance ministers have The key areas of the Directive, including to be heavily impacted by the Directive. backed the AIFMD in May, bringing the most controversial issues and At present, there is generally little or no regulation for the hedge fund industry a their impact on real estate funds in regulation of these types of real estate step closer. Finance ministers will now Luxembourg, are summarised below. vehicles. engage in discussions with the European Parliament. This comes after the Parliament in May agreed on a common Continued 8 Benelux Real Estate Insights

Impact of AIFMD on Luxembourg real estate vehicles

There are several controversial areas Issues related to limitations of related to the scope of the Directive. leverage The drafts, for instance, disagree on the exclusion of managers only involved with The drafts introduce liquidity funds with aggregate assets below de management obligations. Real estate minimis limits, and exclusion of banks funds systematically employing high and insurers that invest in alternatives, leverage, with at least a 50% debt to including real estate. None of the drafts equity ratio, should expect to be subject yet give a clear definition of the manager to significant additional disclosure in order to determine which entities are requirements to regulators and investors. out of scope. In addition, it is foreseen that the governmental bodies may, in crisis Impact of prior authorisation and situations, set limits on leverage levels notification procedure employed by the fund manager. It is not clear yet how leverage is calculated, All three drafts support an onshore as liabilities and equity may be defined passport for authorised alternative the Directive will in many cases hence end is in line with the Part II UCI deadline differently depending on the GAAP used investment funds and their managers, so result in additional costs related to the but not with the six-month deadline for (IFRS or Lux GAAP). If limitations are set, that funds can be distributed by means of implementation and documentation a SIF or SICAR. There is expected to be there would be consequences for the a straightforward notification procedure. of these controls, having an impact additional resourcing pressure in order to structuring of real estate funds from a tax The question is whether this procedure particularly on smaller operators. meet this shorter deadline. perspective, and returns and profitability will effectively simplify the process of of investment products based on real creating new cross-border funds. Impact of reporting requirements Impact of capital requirements estate funds would also be affected.

Impact of conduct of business The drafts require that important The drafts introduce regulatory capital “Valuator” issues operations information will need to be reported requirements for fund managers. There regularly to regulators, to allow member are no capital requirements for funds The initial draft of the Directive The drafts all impose extensive internal states to intervene if necessary. The themselves. The requirement of the required each fund manager to involve systems and control requirements. drafts vary in the extent to which Directive for the fund manager is to have a an independent EU “valuator”. In Real estate fund managers will have to information about holding interests will minimum of €125,000 plus 0.02% of any subsequent drafts, the independence implement documented internal systems need to be reported. These disclosures excess of assets under management over and liability of the valuator have been for their processes concerning risk may result in substantial additional €250 million. This should have a limited debated. Independent valuators are management / portfolio management reporting for real estate funds. In addition, impact for managers of Luxembourg real already required by law for Part II UCIs separation, liquidity (stress testing), the Directive also imposes a tighter estate funds. The Management Company but not for a SIF or SICAR. In practice, conflict of interest management, due annual accounts preparation timetable. of any FCP is already required to have a diligence, etc. The implementation of The four-month deadline after the year minimum capital of €125,000. Continued 9 Benelux Real Estate Insights

Impact of AIFMD on Luxembourg real estate vehicles however, regulated funds involve Issues related to delegation back if their country meets the regulatory using existing private placement regimes independent valuators on a contractual equivalence obligation and compliance if these are not proscribed by the final basis. There might also be independence This area is heavily discussed in the drafts. with the tax exchange information Directive. issues if the valuator is the same as the In accordance with the initial Commission regime of the EU. This may lead to the depository. The initial draft required the draft, fund managers may delegate establishment of operations of some Remuneration valuation of shares or units of a fund functions, such as administration or of these real estate fund managers not only once a year but each time portfolio and risk management, only to EU in the EU. Non-EU funds could be Although not foreseen in the original shares are issued or redeemed. This authorised service providers. Delegation marketed during a three-year transitional Commission draft, it is expected that the would impose heavier obligations on the to non-EU service providers would period, but afterwards would need to final regulation will include provisions managers of real estate funds. Common only be possible if these are regulated be domiciled in a jurisdiction with a tax dealing with remuneration. The exact current practice in Luxembourg is to use and there is a cooperation agreement regime allowing exchange of information form of the remuneration regime is still independent valuators only for the annual between the country of domicile and with the EU. controversial, and yet to be determined. valuations. the EU. The Council draft allows the In their turn, both the Council and delegating of portfolio management Parliamentary drafts abandon the Conclusion Depository issues functions to offshore entities provided requirement to have an equivalent certain less onerous conditions regarding regulation of funds, their managers PricewaterhouseCoopers believes that There is a consensus that depository supervision are met. The Parliamentary and service providers, although the the AIFM Directive is potentially the single duties and responsibilities will be Draft is close to the Commission draft Parliamentary draft is still envisaging most important regulatory development increased. However, there is an ongoing, but adds bars against delegating risk some equivalence with respect to third to happen to those involved in the lively, and politically charged debate and liquidity management to non-AIFMD country depositories. Both of these European alternatives sector. We urge our on the liability of the depositories, and firms. Depending on the outcome of the later drafts also appear to accept the clients to follow these developments very on what type of entities may act as discussions, this may lead to a need for marketing of off-shore funds in the EU carefully. depositories. The impact of the Directive substantial reorganisation of the business under existing private placement regimes, will probably be less for Luxembourg model now in place. although the Commission is thought to Amaury Evrard regulated funds, as they already have to remain opposed to this. Partner, Audit appoint an EU regulated credit institution Issues related to the non-EU One of the possible scenarios may be PricewaterhouseCoopers (Luxembourg) as a depository. For unregulated funds, dimension that non-EU funds increasingly look to this will be a major and entirely new be re-domiciled in the EU. The track Olga Huizinga-Lvova organisational obligation. In the event The “third country” dimension is another record of Luxembourg as a country with Director, Audit that the Directive ends up providing that controversial area. Initially, it had pragmatic yet effective and efficient PricewaterhouseCoopers (Luxembourg) the depository will be responsible for been proposed that the EU marketing regulation may enhance its standing as all assets and any consequential losses activities of non-EU real estate fund a choice of location for real estate fund to investors, a greatly increased cost managers would be shut down for a management and marketing activity. On burden due to extra responsibilities will transition period of three years. Under the the other hand, it may yet happen that it materialise. Commission draft such fund managers will be preferable to locate funds offshore would only then be allowed to come and profit from “regulatory arbitrage” by 10 Benelux Real Estate Insights

The future of real estate financing in the Benelux

The European real estate market Real estate markets after the owners and banks are still wary of taking commit their balance sheets to real boomed during 2001-2008. Cheap boom their losses. Transactions are dominated estate investments. Moreover banks are and proliferate funding led to an by cash rich private investors and equity aiming to lower their overall exposure to Following the credit crisis, the number financed real estate funds, as equity is real estate lending, especially in project historical number of transactions of real estate transactions has fallen often a large slice of funding in current finance. and a bubble in asset valuation. dramatically. For the time being this transactions. Recovery of the Benelux During these years a record number is likely to stay lower than real estate market is not anticipated Breaching of covenants and amount of debt was issued while during the boom years as investors are before the end of 2010. When it does distress waiting as a result of uncertainty around come it will be in different phases for lenders were accepting ever lower valuations and there being less liquidity in different types and segments. To date we have seen a remarkable lack margins and ever higher loan-to- the system as a whole. Rising yields have of visible distress in the Benelux. One values (LTV) at (often) lenient loan led to price deflation while both falling Financing conditions reason is that there has been a marked terms. market rents and rising vacancy rates difference in lending in Anglo-Saxon have put downward pressure on rental The dramatic fall in the amount of liquidity countries and mainland Europe. Not only income. means that real estate companies are was the total amount of transactions chasing less and in many cases more in the boom lower than in the UK and Transactions that do take place are often expensive credit. While banks are US, but these transactions were also in the “A” segment rather than the “B” charging higher arrangement fees and financed more conservatively with lower or “C” segment. In these more risky risk premiums, there is also pressure on loan to value (LTV) ratios. Also historically segments the blow is yet to come, as lending criteria with lower LTV ratios, a European lending has been dominated by strong focus on covenants and a focus on-balance-sheet debt (i.e. banks) rather on the underlying collateral. Lastly, while than off balance sheet debt (i.e. CMBS’s). a couple of years ago balloon payments were the norm, now increasingly lenders Other reasons for this lack of visible are seeking early amortisation. All these distress are that banks have been elements affect real estate returns, propped up with government funding making early planning imperative in order and low interest rates. Moreover banks to secure liquidity sources. have been holding on to their distressed For the near future credit conditions portfolios on the one hand to ride out will continue to be less benign than the the storm and support creditors in dire last 10 years. The source of easy credit times, and on the other hand to avoid has dried up and risk premiums have the negative publicity associated with increased. Increased Basel II capital bankruptcy procedures. Also they are requirements in conjunction with the eager to avoid writing off debt. Some time uncertainty around the direction of securitisation leave banks hesitant to Continued 11 Benelux Real Estate Insights

The future of real estate financing in the Benelux in the future interest rates will go up. For restructure or liquidate that investment. exposure of banks to real estate lending, be able to rely on financial engineering some real estate sectors and segments With banks anxious to avoid plain however it is worrisome who is going to alone to boost their returns. the blow may then come. As we are now vanilla debt for equity swaps, there are fill the shortfall in demand for and supply However there is activity in the debt looking at the same amount of real estate also other strategies in the “pretend- of debt. There are some new lenders market with banks now focussing on core assets but with significantly less value in and-extend” to “file for bankruptcy” currently entering the market such as the geographies, on existing clients and on addition to lower target LTV ratios, further continuum that banks can pursue with highly regulated German Pfandbriefe or club deals. Lenders are looking at prime deleveraging will be required. respect to non-performing loans. A covered bonds. properties with stable income producing In some cases investments will need controlled wind down may be more Refinancing will prove difficult and cash flows. In order to get credit, restructuring. As collateral values fall and optimal, as realised transaction prices often the only option available (for borrowers will need robust business LTV covenants are breached, lenders will may be higher than forced sales. both borrowers and lenders) will be plans that take into account the risks remain averse to foreclosing in response Banks will the also fully benefit from the rolling over of existing facilities, be from the lenders point of view. For project to these breaches. Provided that interest any potential rises in value through it at new (more stringent) conditions developers it will remain a challenge to payments are made, banks are generally turnaround asset management and/or and higher margins. Renegotiation on find sources of liquidity to finance new cooperative, but are also likely to amend market recovery. these existing facilities will prove to be initiatives. loan terms. It is helpful to keep in mind that buyers of tough. Though only a fraction of the In the near future the balance of power However downward pressure on market distressed debt may not have the same total debt outstanding in the Benelux, will continue to tilt towards the sources rents and increasing vacancies may lead investment objectives as banks. The the refinancing of CMBS’s could of liquidity i.e. (new) equity participants, to more breaches in interest coverage purpose of their investment may be to prove to be even more problematic, banks and alternative forms of credit. All ratio (ICR) and debt service cover ratio retrieve the collateral, effectively buying as a straightforward roll over with a in all, this means that the funding of new (DSCR). Also, while interest only (IO) the underlying at a discount. multitude of creditors and lenders will be investment initiatives has more than ever loans and loans with a low amortisation cumbersome. become a strategic question. have a lower probability of default on Refinancing in the Benelux DCSR ratios during the life time of the New initiatives Wendy Verschoor loan, at maturity there is a significantly Real estate companies’ ability to Principal Manager, Advisory higher likelihood as the bullet repayment refinance real estate related investments The severe contraction in debt availability PricewaterhouseCoopers (Netherlands) will depend on either a successful sale or will prove to be of particular importance together with the refinancing of past a successful refinancing. Both of these to those who have made investments short-to-medium term acquisition debt Caroline Beijdorff are hard to achieve in the current market. over the last five years with short-to- will limit the amount of cash available Manager, Advisory Project developers are having particularly medium term acquisition finance. The for new initiatives. With banks remaining PricewaterhouseCoopers (Netherlands) hard times as letting is currently difficult record number of transactions during the more cautious in lending and keen to and/or investors have not materialised. boom years coupled with high leverage lower their overall exposure to real estate Whatever the underlying reason, all in all means that an historical but unknown lending, real estate investors will need to when an investment’s ability to generate amount of debt will be maturing in get used to lower overall levels of debt. enough cash to service the debt is at risk, the coming years which will lead to a Also real estate investors may need to lenders might take a different approach “refinancing bubble”. These maturities seek alternative sources of liquidity. The and stakeholders will seek to either are probably sufficient to lower the overall bottom line is that Investors will no longer 12 Benelux Real Estate Insights

Model for valuation of investment properties under construction

Present practice estimated sales price minus the expected When a development project has already remaining costs of the development commenced and market conditions Common practice to determine the project. With respect to profit and risk change, the static approach has the feasibility of a development project is it is common to use a predetermined disadvantage that it doesn’t give insight the use of a static model. Such a model percentage of revenue before deduction into the real time market value with is used to determine the maximum of development expenses. The residual respect to that particular development investment regarding the development; then equals the maximum investment of phase. this can be the maximum price for the the property under development in its plot of land or for property which is to be current condition. The advantage of this redeveloped. The maximum investment approach is that it offers a quick insight or so called residual value equals the into the feasibility of the project. Continued 13 Benelux Real Estate Insights

Model for valuation of investment properties under construction

Residual value: Expected Market Value minus development costs influence the development process and Monte Carlo simulation). market situation 1 which risks are subject to change during As an alternative, it is also possible to use Market value, after completion development € 40 million time. From a risk management point of a pragmatic approach. Such an approach Development costs, as January 1st, 2010: view, the perception of risk regarding is based on the following assumptions: Construction costs, the development project is not only of Advisors costs and fees, concern to the owner/developer but also Valuation principles Additional and selling costs, to the parties financing the project. Starting point is a fully let investment Rent during construction period. subtotal 1 - / - € 27 million A more dynamic approach, with esti property after completion of the mated cash flows and a discount for time development. The profit of the Profit and risk premium developer. subtotal 2 - / - € 4 million and risk premium is shown in figure 3. development project equals the sales Market value development project as 1-1-2010 € 9 million revenue of the completed project minus Figure 1: Example of static, nominal approach of a valuation development project The challenge is to determine a discount all the costs associated with realization of rate that reflects the time value of money the project. and the risk premium of the project cash During the project the risks have to In stable or increasing markets this will For instance, in figure 2 the market value flows. In addition to the time value of be identified. This means that certain most likely not provide a problem. Under of the project after completion drops by money, the discount rate must also reflect risks, relevant in earlier phases of the current market conditions however, 10%. Subsequently the market value the risk of the estimated cash flows. A development, could possibly have understanding of the market value and of the development project drops more solution in absence of market evidence disappeared. The most important risk the remaining risks of the development than 40% to €5 million. The example is the use of a calculation model in factors of property development are: project is crucial. in figure 2 fails to identify which risks accordance with statistical theories (e.g. • Cost related risks: excess acquisition-, construction-, interest and marketing costs; Residual value: Expected Market Value minus development costs • Time related risks: delays from market situation 1 market situation 2 difference environmental and ecological planning ( -/- 10%) procedures, objections, labour Market value, after completion development € 40 million € 36 million 10% disputes; Development costs, as January 1st, 2010: • Market related risk: changing market Construction costs, conditions, interest rates, vacancy Advisors costs and fees, rates, incentives. Additional and selling costs, Rent during construction period. subtotal 1 - / - € 27 million € 27 million 0% The valuation per phase is based on the relevant cash flows, an estimated time Profit and risk premium developer. subtotal 2 - / - € 4 million € 4 million 0% value of money and the remaining project Market value development project as 1-1-2010 € 9 million € 5 million 44%

Figure 2: Example of static, nominal approach of a valuation development project Continued 14 Benelux Real Estate Insights

Model for valuation of investment properties under construction risks. Last but not least the valuation is Discount rate (deducted from simular transactions of new standing investments) 7,00% based on the interpretation of the basic Additional risk premium development valuation principles and assumptions. Risk premium in points 0 50 100 150 200 Risk premium gradation very low low average high very high total Alternative pragmatic model delay as a result of legal objections x 1,50% construction permit x 0,50% This dynamic approach uses a environmental permit x 2,00% discounted cash flow model. The incidental expenditures x 1,00% projected cash flows are specified as: letting in advance x 1,00% • Estimated revenue (market value) of fit in existing environment x 0,00% the finalized project at the end of the project period; investment financing x 1,50% • Estimated costs as of the present Additional risk premium specific development risks 7,50% situation (see also figure 3). Discount rate for the development project, as of 1-1-2010 14,50% Figure 4: Example of discount rate in a dynamic approach of a valuation of a development project

Residual value: Expected Market Value minus The discount rate is derived from ‘what if’ questions related to particular development costs and minus discount for time transactions of similar new standing circumstances. Deviations can be investments (when the development estimated for different scenarios: worst € 40 million expected market value after project is completed and totally let). case (very high), best case (very low) and development on 30-6- In the dynamic model this is also the probable case (average). 2012 minimum discount rate used during the development period of the project in case In the case of zero risk with respect to 1-1-2011 1-1-2012 there are no additional risks. the development project, the discount 1-1-2010 1-1-2013 The additional risk premium in the rate will be equal to the discount rate development period is estimated for at project completion, which is 7% (see specific project risks per development figure 4). In the dynamic approach, seven 30-6-2012 phase. The risk premium is expressed in risks are specified and denoted in risk time (delay) and money and eventually premiums ranging from 0 basis points only in money. (environmental fit) to 200 basis points € 3 million costs € 6 million costs in 2012 During different phases of the (environmental licensing). before 1-1-2010 development project, deviations can If the same cash flows are used in the be determined by outlaying the risk dynamic model as in the static model, the € 10 million costs in 2010 € 11 million costs in 2011 factors. The sensitivity of the specific risk factor can be determined based on Figure 3: Example of cash flows in a dynamic approach Continued 15 Benelux Real Estate Insights

Dynamic approach 2010 2011 2012 30-6-2012 Practical use nominal -€ 10,0 -€ 11,0 -€ 6,0 € 40,0 discount rate 14,5% discounted -€ 9,3 -€ 9,0 -€ 4,4 € 28,5 As a consequence of a change of 1-1-2010 direction under IFRS for property Market value development project as is 1-1-2010 € 5,8 accounting, development properties (subject to IAS 40R when completed Figure 5: Example of dynamic approach of a valuation development project and let as an investment) need to be determined at fair value as of 1 January market value is assessed at €5.8 million static approach apparently assumes that 2009. As of this date, valuations based based on a discount rate of 14.5% (see the development project has the same on construction costs or a completion figure 5). risk as when the project is completed percentage are no longer common (fully let standing investment). In other practice. Static vs dynamic approach words, the static, nominal valuation With current economic conditions, insight approach, assumes the additional into the value, in addition to insight into In order to illustrate the difference risk premium appears to be a not very cost, is perhaps vital: between the static and the dynamic plausible zero percent. • As extra information in the annual approach, the static example in figure report: comparison between 1 is used to determine which discount The current economic conditions provide investment amounts in the property rate reflects the result of €9 million in the additional incentive to use a dynamic market value; dynamic approach. valuation model which accounts for the • For owners or stakeholders of With the dynamic approach the discount most commonly anticipated risks. distressed real estate; rate turns out to be 7% (see figure 6). The • For financing companies, developers, asset companies, real estate Dynamic approach 2010 2011 2012 30-6-2012 companies and housing associations. nominal -€ 10,0 -€ 11,0 -€ 6,0 € 40,0 discount rate 14,5% discounted -€ 9,3 -€ 9,0 -€ 4,4 € 28,5 Jens Osinga MRE MRICS 1-1-2010 Senior Manager, Tax Market value development project as is 1-1-2010 € 5,8 PricewaterhouseCoopers (Netherlands)

Dynamic approach 2010 2011 2012 30-6-2012 nominal -€ 10,0 -€ 11,0 -€ 6,0 € 40,0 discount rate 7,0% discounted -€ 9,7 -€ 9,9 -€ 5,2 € 33,8 1-1-2010 Market value development project as is 1-1-2010 € 9,0 Figure 6: Difference in valuations as a result of identified additional risk premium 16 Benelux Real Estate Insights

Will the proposed lease accounting rules affect your business?

In March 2009 the International Lessee accounting: to a ‘right-of- Accounting Standards Board use’ concept (IASB) and the US Financial The Discussion Paper introduces the Accounting Standards Board ‘right of use’ concept which replaces the (FASB) issued the Discussion existing ‘risk and reward’ concept. The Paper ‘Leases Preliminary new concept will result in the recognition Views’. This Discussion Paper of all the rights and obligations arising from rental contracts on the balance proposes a new model that would sheet of the lessee as an asset and significantly change the current liability. As a result, the distinction lease accounting for lessees. It is between operating lease and finance expected that an exposure draft lease will be eliminated. All rental contracts, including those that are now to be issued in June 2010 and a accounted for as off-balance obligations, final standard will be available in will be accounted for as on-balance. 2011, expected to be applicable Approximately half of the respondents for financial statements as of to the discussion paper supported the overall principles and objectives set out in 2013. This article will examine the the discussion paper and approximately most important consequences for one-third of the respondents did not tenants (lessees) and the owner of support the preliminary views made in the investment property (lessors). Discussion Paper. the most likely lease term. The lessee’s most likely outcome is that the tenant Most rental contracts agreed between the intentions and past practice would not be will exercise the option to purchase the owners and tenants contain an optional considered in determining the lease term. investment property. period. Optional periods under the It is expected that the ‘most likely lease existing standard, IAS 17, are considered term’ will lead to a longer lease term than The Discussion Paper proposes that the part of the lease term if at the lease the criteria ‘reasonably certain’. tenant would be required to reassess inception it is ‘reasonably certain’ that the their estimates on the option periods right to renew the lease will be exercised. These factors must also be considered, and purchase options for each reporting The Discussion Paper proposes a ‘most in the initial measurement, when a rental period. However the IASB thinks that a likely lease term’ approach. The tenant contract contains an option to purchase detailed examination of every lease is not must consider all contractual and non- the investment property on or after a required unless there has been a change contractual financial factors and non- specific date. The obligation may include in facts of circumstances that would financial business factors in determining the exercise price of the option if the Continued 17 Benelux Real Estate Insights

Will the proposed lease accounting rules affect your business? indicate that the lease term may need to These changes might impact the only be required if the lessor measures be revised. companies’ strategy towards the decision its investment properties at cost. This on renting or buying investment property, will significantly reduce the impact of The initial measurement of the rental sale and lease back constructions, the new lease accounting rules for the contract will be at cost, defined as finance facilities and existing covenants financial statements of the property the present value of the future lease such as loan to value ratio’s and interest investors (measured at fair value) and payments discounted using the tenants’ coverage ratios. will likely lead – if not already done so incremental borrowing rate. The asset by most companies – to more fair value will than be amortized using the straight- Lessor accounting: tentatively accounting of Investment Property. line method and the obligation will be decided to scope out Investment accounted for using an effective interest Property Lessors must however not overlook the rate method. consequences of the lease accounting In the Discussion Paper, the IASB and rules for their tenants and the way that Lessee accounting: consequences FASB consider two approaches that this will affect their own business. It is for the tenant could apply for lessors when using unclear yet what the impact will be on the ‘right of use’ concept. In the first the tenants’ behavior. Will they look for The proposed changes in lease approach (‘derecognition approach’) the shorter lease terms, more break clauses accounting for lessees will have a asset is derecognized from the balance or different lease incentives? And if so, significant financial and business impact. sheet and a receivable for the right to will this affect the lessors’ stable cash The tenants must consider: receive rental income and a residual value flow and value of its property? • That balance sheet totals will increase are recognized. In the second approach with the recognized asset and liability, (‘performance obligation approach’) a We will keep you informed on these increasing the companies leverage lease contract represents a new right. The important issues in next editions of our and decreasing its solvability; asset will stay on balance in the lessors Benelux Real Estate Insight. • That whereas they previously financial statements and a separate asset accounted for rental costs in the is recorded for the right to receive rental Sidney Herwig income statement, they will now show income and a liability is recorded for the Senior Manager, Audit depreciations and interest charges, obligation to provide use of the asset to PricewaterhouseCoopers (Netherlands) therefore increasing the companies the tenant. EBITDA. • That the obligations’ subsequent It is worthwhile to know that the IASB measurement is amortized cost using tentatively decided in January 2010 to the effective interest rate, the costs in remove lessors of Investment Property the beginning of the lease period will measured at fair value from the new be relatively higher compared to the lessor accounting proposals. The new actual paid rent per year. lessor accounting requirements would 18 Benelux Real Estate Insights

Tax update: Belgium

Hereafter, we briefly outline some Corporate tax the Parent-Subsidiary Directive can transparency and international recent changes to the Belgian be carried forward to future tax years. exchange of information, or (ii) dividends received and notional • Dividends received deduction: The same should apply to Belgian and a jurisdiction where the nominal Belgian tax-resident companies (or non-EU dividends in accordance with corporate tax rate is less than 10%. interest deduction rules, new Belgian branches) can deduct 95% the October 2009 practice note. In the event of non-reporting, the reporting rules for payments to of dividends received from qualifying payments will be disallowed for tax havens and new VAT rules holdings from their net taxable • Notional interest deduction (‘NID’): corporate income tax purposes. in respect of the supply of land income (this is the so-called dividends Belgian companies (and Belgian received deduction, hereafter ‘DRD’). branches) can claim tax relief for their VAT together with a new building, The old conditions were that the cost of capital by deducting notional which are of importance for the company (or branch) had to have (deemed) interest, which is calculated • VAT on land: As from 1 January 2011, real estate industry. held or committed to maintaining on their adjusted accounting net the supply of land that belongs to a a shareholding of at least 10% or equity. new building or part of a new building having a minimum acquisition value will be submitted to VAT in so far as of €1,200,000 in the subsidiary for at For budgetary purposes, the NID the supply of the building itself is least one year. rate for tax years 2011 and 2012 (i.e., subject to VAT. In this respect, the financial years ending respectively as Belgian VAT Code has been aligned As of 1 January 2010, the minimum from 31 December 2010 and 2011) with EU VAT jurisprudence. This rule acquisition value has been raised from has been capped at 3.8% (4.3% for allows recovery of input VAT on costs €1,200,000 to €2,500,000. SMEs). incurred in relation to land (e.g. soil sanitation costs). In addition, under previous Belgian tax • Payments made to tax havens: law, any ‘excess’ DRD in a given tax Starting 1 January 2010, companies • Concessions: As of 16 August 2009, year (i.e. that could not be used in the subject to Belgian corporate income a new article has been implemented year in which it arose due to a lack of tax or Belgian non-resident corporate in the Belgian VAT Code according net taxable income to offset it against) income tax that make direct or indirect to which the putting at the disposal could in principle not be carried payments to recipients established of goods immovable by nature in the forward and was thus forfeited. The in tax havens are obliged to declare framework of the operation of ports, ECJ judged however that this rule was them if they exceed €100,000 during navigable waterways and airports is in breach of the EU Parent-Subsidiary the tax year. The reporting has to subject to VAT. Directive. be made on a special form to be enclosed to the tax return. Belgian tax law has now been changed so that any unused portion A tax haven is defined as: (i) a of the DRD from dividends received jurisdiction regarded by the OECD from an EU subsidiary as defined in as not being cooperative concerning 19 Benelux Real Estate Insights

Tax update – Luxembourg

Corporate Income Tax 2010 The circular explicitly excludes from its choice for such investments. scope Luxembourg mutual funds making In July 2009, the Luxembourg investments in Islamic assets. The following Luxembourg government announced it would make no Double Tax Treaties (DTT) became changes to the Luxembourg corporate Murabaha (forward sale) effective as from 1 January 2010: tax rate for the year 2010. As part of its longer term plan, the government had From a Luxembourg tax perspective, the • India reduced the effective corporate tax rate circular mentions that the profit earned • United Arab Emirates from 29.63% to 28.59% in the year 2009 on Murabaha instruments may be spread • Moldova and is still committed to gradually reduce and taxed linearly (at the level of seller • Georgia it to 25.5% in the coming years. providing the financing) over the life of • Azerbaijan the contract, irrespective of the actual Islamic Finance Circular payments made, under certain conditions (and notably provided that the profit is On 12 January 2010, the Luxembourg also recorded linearly from an accounting tax authorities issued their first circular point of view). This position underlines on Islamic finance providing guidance on the emphasis on economic substance of the Luxembourg direct tax treatment of a Murabaha transaction. some of the common Shariah-compliant financial instruments. The brief circular is Sukuk (asset backed securities) of particular relevance to the real estate sector as it has also recognized the The circular confirms that payments predominant Islamic finance instruments made under a Sukuk agreement are, in used by this sector. principle, treated as tax deductible and are not subject to dividend withholding The circular addresses the following tax. The circular thereby puts Sukuk points: agreements and conventional debt • Brief description of the main Shariah instruments on an equal footing for principles and Islamic Finance Luxembourg direct tax purposes. instruments (i.e., Murabaha, Mudaraba, Musharaka, Ijara, Ijara The issuance of this circular aims at wa Iqtina Sukuk ,and Istinah), and confirming the compatibility of the • Guidance on the Luxembourg direct Luxembourg tax framework with Islamic tax treatment applicable to Murabaha Finance requirements and thereby and Sukuk instruments. emphasising that Luxembourg has the potential to become the location of 20 BeneluxCEE real Realestate Estate insights Insights Print Quit Home

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Click on the covers below to launch the other editions in our Real Estate Insight series.

00 Introduction 02 Introduction 02 Introduction - Signs of life in Central 00 UK economy German Real Estate Insights Inhalt 03 Economic views and Eastern European real estate UK real estate insights 00 Financial Services Sector Einleitung ...... 2 Benelux real estate insights 06 The day after tomorrow – a short CEE real estate insights 04 What price paper losses? 00 UK hotels forecast Ausgabe 2 – Februar 2010 perspective on the financial crisis 08 How to survive the crisis through Immobilienbranche proﬁtiert vom Wachstums- 00 How did the budget affect real estate? property optimisation Issue 16 – April 2010 beschleunigungsgesetz ...... 3 Issue 1 – November 2009 09 Belgian and Dutch REIT going 00 Investment in the Private Rented Sector cross-border in the light of the Issue 1 — April 2010 11 CEE tax overview 00 Changing investor demands: Can you Grunderwerbsteuerliche Konzernklausel: neue European fundamental freedoms

Contents 23 Emerging Trends in Real Estate 2010 Contents Contents demonstrate that your operating model Restrukturierungsstrategien ...... 6 12 European Alternative Investment Fund is fit for purpose? Grundsteuererlass: Handlungsbedarf bis Ende März 2010? ...... 8 Manager’s (AIFM) Directive 00 Regulation for the Real Estate Industry – 14 Fraud within Real Estate companies – Update zur AIFM-Richtlinie ...... 10 Alternative Investment Fund Manager lessons (to be) learned Directive Prospekthaftungsrisiken aus Prognoserechnungen 16 Tax updates 00 Real estate and the UK offshore funds rules geschlossener Fonds ...... 14 00 Tenant administration – the lease’t’ attractive 20 Recent publications option of several evils „Green Lease“: vertragliche Sicherung der Nachhaltigkeit ...... 16 00 Emerging Trends in Real Estate Europe Investitionsboom in Wohnimmobilien: Chancen und Risiken ...... 19 00 Financial reporting update Immobilien im Bau: Erweiterung des Anwendungsbereichs 00 UK Real Estate Webcasts von IAS 40 ...... 21 00 Going Global Immobilienkäufe im aktuellen wirtschaftlichen Umfeld ...... 23 Print Quit 00 Events and publications Print Quit Print Quit

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If you would like to view or Asset Management download a soft copy of any of these publications, simply click on on the relevant icon. Emerging EmergingEmerging AIFMD News the relevant icon. Time for a second reading? Trends® EmergingEmerggggging in Real Estate TrendsTrends® iinn RRealeaall EEstatestaatte You will be directed to our global Europe TrendsTTrenndsd ® AsiaAsia PacificPaciffiic You will be directed to our global inn Real EstateEsstate website www.pwc.com/realestate March 2010 | Edition 3 website www.pwc.com/realestate where a pdf will be made where a pdf will be made available. 2010 2010 available. 2010

If you would like further information about these publications, please email 1 [email protected]@nl.pwc.com Emerging Trends in Real Estate® Emerging Trends in Real Estate® Emerging Trends in Real Estate® The draft AIFM Directive Europe in conjunction with the USA in conjunction with the Asia in conjunction with the Urban Land Institute Urban Land Institute Urban Land Institute

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