CACEIS NEWS 35

No. 35 - October 2013 - caceis news 5 produCts and services

AIFMDwill help the international development of OPCIs Thierry Gaiffe, Managing Director, Paref Gestion

In France, real estate investment funds (SCPIs and OPCIs) have been seeing large inflows for several years. Given the positive environment in your sector, what are Paref Gestion’s key areas of development? Since 2008, real estate funds have outperformed other collective asset management products in France. Investors are looking for stable returns, and real estate investments have been very popular. According to ASPIM, OPCI funds had assets under management of €28.9bn at the end of 2012, and SCPI funds saw net newmoney of €1,103m in the first half of 2013, taking the market capitalisation of SCPIs to a new record of €28.55bn. Since 2009, Paref Gestion has benefited from this positive environment and has seen inflows of around €200m. However, we are still very careful to ensure a good fit between inflows and investments.

rules) is a flexible tool that can be tailored to the requirements of an institutional investor that wants to outsource its property needs. Paref Gestion targets this kind of vehicle. AIFMD introduces new constraints, but also opportunities for international growth. How is Paref Gestion adapting to the new regulatory environment? I believe that AIFMD will help the international development of OPCIs. We are currently meeting foreign investors who are interested in the vehicle, and the marketing passport also gives us international credibility among foreign independent distributors. Paref Gestion already met most of the directive’s requirements in terms of its compliance system, internal control, observance of conduct rules and depositary, having selected CACEIS for its OPCI funds. The new regulations harmonise operating rules within the EU and reduce the competitive advantages of asset management companies operating in countries where regulations were less stringent. What impact is AIFMD having on SCPIs? AIFMD was transposed into French law in summer 2013, and at the same time changes were made to improve the management of SCPIs by giving greater flexibility. SCPIs will now be able to acquire buildings indirectly via intermediaries and they can plan to launch new buildings. Previously, the sole aim of SCPIs was to acquire and manage rental properties. To put them on an equal footing with other real estate funds, the period during which SCPIs have to own properties has been reduced from six to five years. In addition, companies managing SCPIs must appoint a depositary, which I believe makes them safer for investors. Which CACEIS services can help Paref Gestionmeet the requirements of AIFMD? Paref Gestion has used CACEIS’s depositary services for its OPCIs, and we are very pleased with the result. CACEIS gives us confidence in dealing with the new regulatory framework with respect to this service. CACEIS’s work as custodian has supported our internal control procedures and our audits of external partners, such as property management companies. Its regulatory expertise has also been very useful in practical terms. These qualities make CACEIS a natural partner for SCPIs ■

At 30 June 2013, Paref Gestion had €800m of assets under management, with €140mmanaged for the Paref parent company - a real estate investment company listed on Euronext - and €660m for third parties. Paref Gestion is an independent player serving both institutional and individual investors. In early 2008, Paref Gestion was approved by the French regulator (AMF) as an SGP (Investment Management Company). Under this authorisation, we manage two OPCI funds (Vivapierre specialising in tourist and leisure properties, and Polypierre specialising in all kinds of business properties) and four SCPI funds (Pierre 48 for residential properties, Novapierre 1 for retail properties, Interpierre France for business properties and Capiforce Pierre for retail properties, offices and business premises). Paref Gestion is planning to develop an SCPI for retail properties in Germany supported by an experienced local partner in retail properties management. I tend to describe SCPIs as real estate products and OPCIs as financial services, because they can be customised. The OPCI RFA (real estate fund with streamlined operating

AIFMD requires French SCPI managers to appoint a depositary

C ACEIS has supported asset manage- ment companies in developing OPCI and SCPI real estate funds since 2008, and is now helping them comply with AIFMD, which was transposed into French law through an executive order and decree on 25 July 2013. Real estate funds are increasingly popular among institutional and individual investors in France (OPCIs and SCPIs assets under management reached 58 billion at end June 2013). Investors see real estate, and the stable returns it offers, as an attractive alterna- tive to the volatility of equities. The particular characteristics of these real estate funds - i.e. their diversification, risk advantage of AIFMD and enhance real estate fund distribution in France and in the rest of Europe. CACEIS’s PERES team is helping asset management companies take full

mitigation qualities, returns and tax ben- efits - also explain their success. They now have the potential to be successful throughout Europe due to the AIFMD and its marketing passport, which will enable asset management companies to market OPCIs and SCPIs in all EU member-states. A pragmatic approach to AIFMD Asset management companies authorised to market OPCIs already comply with the main principles of the new regulations regarding conflicts of interest, compliance and control. However, they will have to meet new require- ments, such as being assessed by an independ- ent expert, separating risk management from operational functions, performing stress tests, and reporting to investors and regulators. SCPI managers must appoint a depositary by July 2014 at the latest. CACEIS is an active member of the AFTI and took part in all industry working parties along- side ASPIM and AFG in order to prepare for the practical implementation of these meas- ures. As a result, it has been able to develop solutions addressing the new requirements of real estate fund managers. CACEIS’s pragmat-

ic approach involves adopting the level of de- tail required by asset management companies and addressing their concerns, ensuring that the transition to the new regulatory environ- ment is as smooth and transparent as possible. An organisation and solutions that meet the new requirements of AIFMD CACEIS’s Private Equity & Real Estate Servicing department (PERES) comprises sales, middle-office and fund administra- tion teams working exclusively for real estate and private-equity fund managers. CACEIS France’s Real Estate clients have warmly wel- comed this new organisation, since it gives them a single specialised contact who can quickly provide practical solutions to their needs, and ensures effective transaction pro- cessing. As regards checking the effective ownership of assets held by funds and moni- toring cash flows, the operational process is made more efficient by the close relationships that CACEIS establishes with the real estate managers’ accounting teams. CACEIS meets the requirements of AIFMD regarding its depositary service, but also helps asset management companies meet new re- quirements and market their funds interna- tionally. To help asset management companies control their spending on information systems and human resources, CACEIS enables them to outsource various tasks. For example, the group has set up Luxcellence, which can han- dle risk management for asset managers. This arrangement enables each party to carry out its business without any conflicts of interest. As well as risk management, clients can out- source performance measurement and market

walid mounaouir, Head of Private Equity & Real Estate Servicing, CACEIS, France

risk analysis based on portfolio VaR calcula- tions and stress tests. CACEIS also offers ser- vices supporting the cross-border marketing of funds. By helping to give investors accurate informa- tion, CACEIS enables asset management com- panies to meet the expectations of clients and regulators more effectively as regards trans- parency, risk, performance and valuation, and allows them to focus on managing their real- estate investments. These services illustrate the specific skills of CACEIS’s teams, which provide ongoing support to asset manage- ment companies with their plans to set up real-estate funds and market them in France and elsewhere in Europe ■

CACEIS is the leading depositary and administrator by number of asset management companies and OPCIs: 65 OPCIs 14 Asset Management Companies By meeting evolving client needs and the requirements of AIFMD, CACEIS is aiming to become the leading depositary for French SCPIs.