On 27 June 2017, a draft Law on Belgian REITs (the so-called Regulated Real Estate Companies or B-REITs) was submitted to the Belgian federal Parliament. The draft Law amends the existing regime for public and institutional B-REITs and introduces a new category of B-REITs with social purpose.
The majority of the new provisions aim at amending the existing regime for public and institutional B-REITs. Significant changes include the following:
- Permitted activities of the B-REITs will include all activities related to the infrastructure sector (including participation in DBFM contracts, concessions and other forms of public-private partnerships, energy, networks, utilities, water, waste treatment, etc.);
- The obligation for public B-REITs to have sole or joint control of the companies in which they hold shares will be lifted. The draft Law however provides that (i) public B-REITs should have a minimum participation of 25% and (ii) the value of participations in which public B-REITs do not have sole or joint control or in which they do not hold 50% or more of the shares, may not exceed 50% of their consolidated assets;
- Under the new regime, natural persons will be able to hold securities issued by an institutional B-REIT. However, the draft Law requires that the amount of the subscription (in case of capital increase) or the purchase price (in case of a purchase or exchange) should exceed a certain threshold that will be determined via a royal decree.
- The rules on maximum debt ratio will be adopted to provide public B-REITs a level playing field in comparison with other creditors in the context of infrastructure project funding (PPP and projects in renewable energy).
In addition, the draft Law introduces the B-REIT with social purpose. This social B-REIT will be active in real estate infrastructures that are needed in the social sector such as schools, senior housing, hospitals, institutions for the disabled, prisons, etc. It should foster the financing of such social infrastructures by granting them a similar tax treatment as public and institutional B-REITs. The rules applicable to social B-REITs differ those applicable to public B-REITs. For example, there is no listing obligation and the social B-REIT should take the form of a cooperative company.
The Law should be voted soon in Parliament. It will enter into force on the day of its publication in the Belgian Official Gazette, which is expected in the following weeks.
Read the draft Law here.