October seems to have flown by, the clocks have gone back and we are already in the days of early dusk. I hope everyone is well and keeping safe. Given that we are all (mostly) working from home, AREF and the Investment Association (IA) have adopted their own form of Daylight Saving, encouraging everybody to take extra time outside in the daylight at lunchtime. I’ve made myself do this and it does make a real difference to how I feel. I recommend it to everybody if they can fit it around work and family commitments.
This month we welcome four new members: BNP Paribas Real Estate Investment Management, State Street Trustees, Alvarez & Marsal Taxand LLC and Burges Salmon LLP. In addition, PfP Capital is making the transition from Associate to full Fund Member with the PfP Capital MMR Fund. To add new members in these times is a testament to the hard work of the team and the Committees and the value that they are adding to our members, and in particular to the work of Ed Protheroe in reaching out to potential new members. Ed gives more detail here.
In last month’s Newsletter I mentioned the three issues which were top of our agenda: the general lifting of the Material Uncertainty Clause and the consequent ability of suspended open-ended property funds to reopen; the FCA consultation “CP20/15: Liquidity mismatch in authorised open-ended property funds”; and the threats to property income from the eviction moratorium and the rising number of CVAs. These remain top of the short-term agenda.
- We continue to monitor members reopening and the level of redemptions which they are facing, and feeding this information back to the Treasury.
- The joint response with the Investment Association to the FCA Consultation is in its final stages with submission due early next week (link). Thank you to all members who have contributed, whether by email, in a call or at a roundtable. The process has resulted in a detailed and nuanced document. We will be engaging with the FCA straight after submitting the document in order to discuss the next steps. We will also be responding to the associated and recently published consultation from HMRC on ISAs and authorised open ended property funds (link). We would welcome members views on this.
- The work on the moratorium and CVAs continues. We have been working with fellow members of the Property Industry Alliance (PIA) on a survey which should be going out to members next week. It has taken longer than expected to prepare due to valuable input from other PIA members and also to guidance received from Government officials as to what they will find most useful. We hope that the results will paint a true picture of the loss of income which landlords have suffered during the pandemic and, crucially, of the amount of support that has been given to tenants.
One of AREF’s long term priorities is to make sure that, with the move from DB to DC, the growing DC savings market is able to invest in unlisted real estate funds and take up the slack from declining DB investment. Not only is this an important goal for AREF, it is also an important policy objective for the Bank of England, Government and the Investment Association. In July 2020 the IA issued a position paper on the Long Term Asset Fund (LTAF), designed to facilitate the above objectives. The idea has been well-received and some AREF members have started working with the IA to look at some of the operational and tax issues surrounding the LTAF. We hope that real estate can be the first asset class to bring the LTAF to fruition and can, in the process, act as a template for other illiquid asset classes such as infrastructure and private equity.
I would also like to flag up that AREF has successfully resolved a complaint made by an investor under the AREF Code earlier this year. Investors can contact me if they believe that a manager has infringed the Code and the matter will be taken up by the non-fund-manager members of the Board in order to avoid conflicts of interest.
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