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Brussels, 13 March 2008

Report on open-ended real estate funds: Frequently Asked Questions

(see IP/08/442)

What will the European Commission do with this report?

The report represents an important input to the Commission's work in this area. The Commission will submit the assessment and views of the Group to wider scrutiny and open debate before developing a basis for a formal position. To this end, the Commission has organised an Open Hearing in Brussels on 8 April 2008. On this occasion the Commission will also give consideration to other types of non-UCITS funds aimed potentially at the retail investor.

Stakeholders are also invited to send their comments on this report to the following address by 16 May 2008:

These reactions will be published on the Commission's website unless confidentiality is requested. In autumn 2008, on the basis of stakeholder reactions and further internal analysis, the Commission will publish a Communication detailing what action, if any, is needed to facilitate the EU market for open-ended real estate funds and other categories of non-harmonised retail funds.

How was the report prepared? In what capacity were experts acting?

The report reflects the outcome of the Expert Group's discussions during the period July 2007 – January 2008. During that period, the Group met five times to discuss an evolving draft of this report. In the limited number of instances where points of view could not be reconciled, this is made clear in the body of the report. The report does not necessarily reflect the views of the organisations to which the experts belong. They reflect consensus within the Group, and not the views of the Commission, the wider industry or other stakeholders.

How were the experts chosen?

The group was made up of persons having direct relevant commercial experience in the matters covered by the mandate. Provision was made for the participation of observer(s) from consumer/investor associations and regulators. The members of the group were appointed by the Commission on the basis of an open invitation for applications comprising CVs and letters of motivation from interested individuals.

What was the role of Commission staff in the running of the groups and preparation of the report?

The role of Commission staff in this process was to facilitate discussions – by providing secretarial support in organising and hosting the meetings, and acting as the scribe for the group's discussions. The report represents a fair presentation of the views of the Group's members. It should not be construed as reflecting the views of the Commission or of its services.

Why is the report limited to open-ended real estate funds and not other types of vehicles?

The Group considered the variety of different investment products that can offer retail investors exposure to the real estate asset class. The Group concluded that the redeemability of fund units, which can generally only be provided via an open-ended fund structure, was a key consideration when designing suitable products for the retail market. Group Members therefore agreed to focus their report on the regulatory arrangements for this particular real estate fund market segment. It makes no value judgements on the quality or suitability of other types of real estate investments for retail investors.

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