According to INREV, the AIFMD must clarify the requirement for day-to-day control over portfolio assets to avoid penalising real estate joint ventures with an inappropriate structure.
The body urged ESMA to rethink draft guidelines on collective investment undertakings to avoid capturing joint venture agreements. However, it resisted a tighter definition of what might constitute a joint venture. INREV's sticking point comes over the definition of day-to-day control over a fund's assets. The broadly worded definition, were it to include real estate funds, could require a level of activity inappropriate to an illiquid asset class – especially in joint ventures split between financial and management partners.
INREV public affairs director Jeff Rupp said: "It's critical that they understand how it works in real estate – on an infrequent basis. It wouldn't take much – just a slight clause, or even a footnote, to say real estate is different and to clarify that the day-to-day management of portfolio assets would not mean doing something with those assets every day."
The UK Association of Real Estate Funds, in its submission to a domestic consultation launched on the implementation of the AIFMD, welcomed a softening of the controversial depository requirement on the basis that a shortage of UK depositories would leave specialist and smaller managers struggling to find one, "either at a competitive price or at all".
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