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Following its successful acquisition of Crestbridge last month, Gen II Fund Services (Gen II) has announced that Alex Le Quesne has been appointed to the role of Head of Real Assets – Europe.

In his new role, Alex will be responsible for overseeing client service and the development of Gen II’s Real Assets service offering across its European jurisdictions.

Alex has over 19 years’ industry experience. Before joining Gen II he was Head of Governance Services at Crestbridge and before that he led and developed the business’s highly successful Real Asset Funds team. Alex has also been a director of a corporate trustee which acted for both regulated and unregulated property unit trusts, holding over £10bn assets in total. Previously, he was employed by a major global bank.

Michael Johnson, Chief Commercial Officer – Europe said:

“Gen II’s acquisition and integration of Crestbridge’s experienced team and service capabilities demonstrates our commitment to becoming the leading provider of capital fund services globally. Through our network of offices, we provide clients with an extensive range of services to help support their strategic ambitions and meet their regulatory obligations. Alex has significant experience in real assets and will be instrumental in leading and developing Gen II’s Real Asset service offering across Europe. His collaborative approach and significant industry expertise will be an invaluable addition to our senior team.’

Dean Hodcroft – Head of Europe commented:

‘It’s an exciting time for Gen II as we continue to expand our substantial European footprint and bring our clients an increasing range of expert services. Alex’s considerable industry experience will play a crucial role in helping us to continually evolve our Real Assets proposition for our global client base.”

About Gen II

Gen II is a leading global fund administration provider focused entirely on serving private capital asset managers and investors. Since its inception in 2009, the company has become one of the largest independent global private capital fund administrators, with more than $1 trillion of private fund capital under administration. Gen II offers private fund sponsors a best-in-class combination of people, process, and technology, enabling GPs to manage their operational infrastructure, financial reporting, and investor communications most effectively. For more information, please visit gen2fund.com.

Media Contacts:

For Gen II Europe:
Daniel Jason
Material Impact
dan.jason@wearematerialimpact.com

 

For Gen II Jersey:
Adam Riddell
Crystal PR
adam@crystalpr.co.uk

Gen II Fund Services (Gen II) has appointed Matt Le Noury as Head of European Operations as the global service provider continues to expand its proposition and grow its team across Europe.

Matt will play a key role in supporting Gen II’s expansion strategy in Europe by overseeing the business’s drive for operational excellence through process optimization and deployment of cutting-edge technology platforms across Gen II’s European locations including Jersey, UK, Luxembourg, and Ireland.

With more than 25 years’ experience in financial services and accounting, Matt is a qualified chartered accountant with expertise in private asset fund administration and accounting, and an in-depth knowledge of industry technology solutions.

Prior to joining Gen II, Matt was European Head of Private Asset Administration for a large global services provider. He is a Fellow of the Association of Chartered Certified Accountants (FCCA).

Matt’s appointment follows the recent announcement of the successful close of Gen II’s acquisition of Crestbridge, as the business continues to pursue a growth strategy in Europe and assert its position as one of the world’s largest independent private capital fund administrators.

Michael Johnson, Chief Commercial Officer – Europe said:

“Matt’s appointment comes at a fantastic time for the business, as we set out on our new journey in Europe and continue to evolve our market-leading service proposition for private equity and real asset managers both across Europe and globally. His expertise and experience will be vital as we look to further embed cutting-edge systems and integrate greater levels of automation into our capabilities, to provide our clients with the high-quality service they demand.”

Ishita Shah, Global Chief Commercial Officer said:

 “Gen II’s expansion strategy in Europe is underpinned by our commitment to operational excellence delivered through our highly experienced, industry-leading teams. I’m excited to welcome Matt to Gen II, where he’ll play a vital role in overseeing the evolution of our operational capabilities across Europe and help us achieve our wider ambition to be the leading global private capital fund administrator.”

About Gen II

Gen II is a leading global fund administration provider focused entirely on serving private capital asset managers and investors. Since its inception in 2009, the company has become one of the largest independent global private capital fund administrators, with more than $1 trillion of private fund capital under administration. Gen II offers private fund sponsors a best-in-class combination of people, process, and technology, enabling GPs to manage their operational infrastructure, financial reporting, and investor communications most effectively. For more information, please visit gen2fund.com.

 Media Contact:
Daniel Jason
Material Impact
dan.jason@wearematerialimpact.com

Gen II makes senior client service appointment in Luxembourg to support evolution of Luxembourg proposition and drive its European growth strategy

Gen II Fund Services (Gen II) has appointed Richard Browne as Head of Client Service – Luxembourg, as part of its continuing goal to become the leading global private capital fund administrator.

In his new role, Richard will be instrumental in ensuring the provision of first-class services through the business’s highly experienced, expert team in Luxembourg. He will be responsible for developing Gen II’s expanded full service offering in the jurisdiction, encompassing fund administration as well as ManCo and depositary capabilities. Richard will also work with Gen II’s senior team across its network of offices, to contribute to the business’s continuing growth in Europe and globally.

With 25 years’ experience in the finance industry, Richard has a deep knowledge of the international fund administration sector and considerable expertise in building, developing, and leading talented teams dedicated to service excellence.

He joins Gen II having most recently served as Deputy CEO and Head of Private Asset Fund Administration at a bank-owned fund service provider in Luxembourg. Prior to this he held several senior level roles in both Luxembourg and Guernsey at another major multijurisdictional fund administration business.

Richard’s appointment follows the recent announcement of the successful close of Gen II’s acquisition of Crestbridge, as the business continues to pursue a growth strategy in Europe.

Michael Johnson, Chief Commercial Officer – Europe, Gen II said:

“It’s an incredibly exciting time for Gen II as we continue to expand our European service offering, and our expert team in Luxembourg is a key part of that. We’re now able to offer a full-service proposition through Luxembourg, spanning fund administration as well as management company and depositary services. Richard will be pivotal in overseeing and ensuring the provision of seamless, first-class experience for our clients across Europe and globally.”

Steven Millner, CEO of Gen II added:

‘It’s fantastic to welcome an industry professional of Richard’s reputation and experience to lead our expanded team in Luxembourg. As demand for expert support across fund administration and management company services continues to grow in the jurisdiction, Richard’s leadership will be invaluable in securing Gen II’s reputation both in Luxembourg, and globally, as the leading provider of private capital administration services.’

About Gen II

Gen II is a leading global fund administration provider focused entirely on serving private capital asset managers and investors. Since its inception in 2009, the company has become one of the largest independent global private capital fund administrators, with more than $1 trillion of private fund capital under administration. Gen II offers private fund sponsors a best-in-class combination of people, process, and technology, enabling GPs to manage their operational infrastructure, financial reporting, and investor communications most effectively. For more information, please visit gen2fund.com.

Media Contact:
Daniel Jason
Material Impact
dan.jason@wearematerialimpact.com

The secure and modern portal enables GPs to provide increased transparency and enhanced reporting to LPs

NEW YORK, May 8, 2024 — Gen II Fund Services, LLC (“Gen II”), a premier independent private capital fund administrator, is excited to announce the rebranding of its investor portal, Update Capital, to Sensr® Portal. Sensr® Portal empowers fund managers to improve investor relationships with efficient, robust communications, data analytics, and reporting. Sensr® Portal is the latest addition to Gen II’s innovative Sensr® product suite.

“We continue to invest in and enhance our digital solutions,” said Robert Caporale, President – Strategic & Digital Solutions, Gen II. “Sensr® Portal and the broader Sensr® product suite are poised for ongoing expansion, promising to deliver even greater capabilities and innovations.”

Sensr® Portal is a one-of-a-kind, revolutionary platform that empowers GPs to provide fund transparency and build unprecedented trust with their LPs. Sensr® Portal’s key benefits and features include:

    • Ease of use: Sensr® Portal provides a single, branded, white-labeled portal that allows you to manage numerous funds, investors, and contacts, centralizing documents, data, and analytics while offering tools to enhance communications and operations.
    • Increased investor engagement: Sensr® Portal allows fund managers to quickly upload and share personalized documents with investors, supporting collaborative dialogue and transparency on fund performance. With seamless application integration and automation, the solution is comprehensive and scalable.
    • Strengthened investor trust: Sensr® Portal includes security protocols that give investors confidence that investment data is safe and secure. Security features include two-factor authentication, role-based permissions, data encryption, and e-signature verification. Sensr® Portal is also SOC 2 Type 2 and NIST-SEC Cybersecurity compliant.

Sensr® Portal exemplifies Gen II’s unwavering commitment to innovation, equipping GPs with the essential data and transparency required to strengthen LP relationships and foster trust. It joins the Sensr® product suite alongside Sensr® Analytics and Sensr® Data Bridge.

For more information on Sensr® Portal, visit https://gen2fund.com/technology/sensr/.

About Gen II
Gen II, a leading fund administration provider focused entirely on serving private capital asset managers and investors, has recently expanded its footprint to European markets. Since its inception in 2009, the company has grown to become one of the largest independent private capital fund administrators, overseeing more than $1 trillion of private fund capital. Gen II is dedicated to offering private fund sponsors a best-in-class combination of people, process, and technology. This enables GPs to effectively manage their operational infrastructure, financial reporting, and investor communications. With the recent expansion into European markets, Gen II is poised to bring its expertise and innovative solutions to a broader audience of asset managers and investors worldwide. For more information, please visit gen2fund.com.

Media Contact
Gen2@highwirepr.com

Originally Published in Thomson Reuters

Ireland is positioning itself as a prime domicile for European Long-Term Investment Funds (ELTIFs) in the light of the forthcoming ELTIF 2.0 Regulation set to take effect on Jan. 10, 2024.

A consultation is underway for the proposed Chapter 6 in the AIF handbook, which runs from Nov. 1 to Dec.13, 2023.

Following consultative meetings between industry representatives and the Central Bank of Ireland (CBI), a dedicated ELTIF chapter, Chapter 6, has been proposed for inclusion in the Alternative Investment Fund (AIF) Rulebook.

ELTIF: Brief Overview

The ELTIF is a pan-European regime designed to channel long-term capital into the real economy. It aims to provide investors, including retail investors, with long-term, stable returns while simultaneously fueling economic growth and job creation.

The ELTIF is particularly primed for financing infrastructure, real estate projects, and unlisted companies that are not traded on a regulated market. With the maturing trends in the ‘retailisation’ of private funds, ELTIFs are increasingly becoming the “go-to” product option for distributing private market and real asset strategies.

The first version of ELTIF has relatively little take-up, however. The ELTIF 2.0 Regulation aims to revitalize long-term investment vehicles in Europe, offering more flexibility and broader appeal to both fund managers and investors.

The ELTIF 2.0 Regulation, officially known as Regulation (EU) 2023/606, was published on March 20, 2023 and is set to come into effect on Jan. 10, 2024. This updated regulation amends the original ELTIF framework from 2015, aiming to better channel non-bank capital into long-term projects and small and medium-sized enterprises (SMEs).

CP155 Consultation & Chapter 6

The CBI’s Consultation on ELTIF chapter in the AIF Rulebook (CP155) introduces Chapter 6 of the AIF Rulebook.

The new Chapter 6 will comprise two parts:

Part I includes:

  • ELTIF restrictions;
  • Supervisory requirements;
  • Prospectus requirements;
  • General operational requirements; and
  • Requirements regarding financial reports.

Part II deals with requirements related to the marketing of ELTIFs to retail investors.

The CBI invites feedback on specific questions concerning the proposed rules.

Main Changes in ELTIF 2.0

As these changes to the AIF Rulebook unfold, the CBI will maintain a continuous dialogue with industry stakeholders.

Investor base: The new regulation allows ELTIFs to attract both professional and retail investors across all 27 EU member states, removing previous investment minimums and portfolio percentage constraints for retail investors.

Asset eligibility: The range of eligible assets has been expanded, and now only 55% of an ELTIF’s net assets need to be eligible, down from 70%.

Eligible enterprises: Fintechs are now included and the market capitalization limit for listed companies has been raised to 1.5 billion euros. Rules for third-country companies have also been relaxed.

Real assets: The economic or social benefit requirement and the 10 million euros minimum investment threshold have been removed.

Fund shares: Now, UCITS and AIFs managed by European AIFMs are eligible, along with ELTIF, EuVECA and EuSEF shares.

Investment rules: The regulation simplifies investment policy and portfolio composition; this includes raising the concentration limit to 30% for an underlying fund and allowing more flexibility in borrowing requirements.

Indirect strategies: ELTIFs can now act as feeder funds to other master ELTIFs and fund-of-funds structures are more flexible.

Why Ireland?

Ireland has long been a hub for asset management and investment funds in Europe. The country offers several advantages that make it an ideal domicile for ELTIFs:

Regulatory expertise: Ireland’s Central Bank has a robust regulatory framework and a deep understanding of the asset management industry.

Global reach: Ireland is the domicile for 5.9% of global investment fund assets and the second largest in Europe. With net assets in Irish-domiciled funds reaching 3.7 trillion euros in 2022, Ireland’s reach is hard to ignore.

Skilled workforce: The country has a highly skilled workforce in the financial services sector, which can provide the necessary expertise for managing ELTIFs.

Strategic location: Ireland’s geographical location and use of the English language make it a convenient bridge between the U.S., UK, and European markets.

Irish ELTIF Structure

The Irish ELTIF will be a standalone product and therefore will not need to be separately authorized as a Retail Investor Alternative Investor Fund (RIAIF) or a Qualified Investor Alternative Investor Fund (QIAIF).

The authorization process for an ELTIF is expected to broadly follow the existing authorization processes in place for RIAIFs and QIAIFs. An Irish ELTIF can be established in many forms of the Irish fund structure such as an ILP, ICAV, CCF, Unit Trust or PLC. It is likely, however, that the ICAV and ILP will be the favored structures. The main attributes of these two structures are set out in the table below:

Attribute

Irish Collective Asset Management Vehicle (ICAV) – Regulated

Investment Limited Partnership (ILP) – Regulated

Regulation Wrapper

ELTIF

ELTIF

AIFMD

Yes

Yes

AIFM Required

Yes

Yes

Investor # Limits

No

No

Domestic GP

Yes

Yes

Open or Closed Ended

Both

Both

Asset Type Limit

No

No

Diversification

No

No

Strategy Limit

No

No

Leverage Limit

No

No

Audited Reporting

Annual

Annual

Tax Transplant

Yes

Yes

Loan Origination Update

The Central Bank has updated its regulations, specifically ID 1084, concerning the loan origination framework for QIAIFs. The original exemption in ID 1084 allowed QIAIFs to issue loans to their wholly-owned subsidiaries. The revision expands this exemption, now permitting QIAIFs to also provide loans to co-investment vehicles where the QIAIF holds a majority stake.

This lending activity must however be secondary to the QIAIF’s primary investment strategy, ensuring that the focus of the fund remains on its principal investment activities.

Next Steps

The CBI will keep its consultation on ELTIFs open from Nov. 1 to Dec. 13, 2023. The European Securities and Markets Authority (ESMA) is expected to publish technical standards for ELTIF 2.0 by Jan. 10, 2023; they are currently under consultation. These will provide further clarity on aspects such as the minimum holding period, liquidity management, and conditions for capping redemptions.

Erin Moffat explains why later living could be the next build-to-rent (BTR) phenomenon, exploring the market dynamics, ESG angles, and the challenges and opportunities that lie ahead.

As the global population ages, the demand for innovative later-living housing solutions is reaching unprecedented levels. While the later living sector is currently undercapitalized, offering immediate investment opportunities, this seems likely to be a temporary condition.

According to Knight Frank, a significant shift is on the horizon, with 67% of investors without capital currently deployed in the sector planning to enter the market by 2028. This means now is an opportune moment for investors looking to position themselves in a sector that may be on the cusp.

This burgeoning interest is not solely driven by the compelling demand-supply imbalance, but also by the sector’s unique Environmental, Social, and Governance (ESG) proposition.

The ‘S’ in ESG is particularly salient. Effective later-living products cannot just be about constructing physical spaces; they need to establish communities to support those making significant lifestyle changes. This is a long-term process that not only fulfills a social imperative but also contributes positively to operational efficiency and EBITDA. Take New Zealand as a case in point, where operators of later living communities such as Oceania Healthcare and MetLife Care are publicly listed companies. This level of maturity in the sector is a strong indicator of its investment viability.

However, the road to capitalizing on this opportunity is fraught with challenges. The planning process is a significant bottleneck, often out of step with modern ESG considerations which is a hurdle for investors, who are increasingly ESG-conscious. Moreover, fire regulations, a topic currently under intense scrutiny, offer another layer of complexity but also an opportunity to innovate for safer and more sustainable communities.

The sector’s challenges extend to public perception and local governance. There’s a clear need to embed specialist later-living housing into local planning guidelines, with a view extending as far as promoting senior living as a solution for housing crises in the Western world. Central to this is the concept of “right- sizing,” which encourages older generations to transition to suitable later living facilities earlier, thereby freeing up family homes for younger occupants. However, this journey to later living can be complicated for participants by confusing processes and terminology, highlighting the key roles of multiple stakeholders, including residents, their relatives, and facility operators.

Addressing the Bisnow conference in September 2023, Martin Earp, CEO of later living specialist Riverstone articulated a vision that captures the evolving dynamics of the sector. They emphasized that today’s generations are not merely aging but ‘actively aging,’ thereby redefining the very concept of retirement from passive to active. While the sector is increasingly incorporating hospitality-inspired elements, Riverstone stressed that the quality of space alone is not enough. The focus must shift towards community building, which is paramount for the well-being of residents.

To broaden this sense of community, Riverstone is also reaching out to the relatives of potential residents.  They are offering a ‘try before you buy’ rental model as a way to alleviate the common apprehensions around making the transition to later living facilities. This approach acknowledges that emotional attachment to family homes remains a significant barrier to entry. It also underscores the need for a comprehensive educational effort to inform potential residents about the manifold benefits of later living communities, beyond just the appearance of the physical environment.

Services in the sector must be customized to meet the unique needs of residents, factoring in location-specific variables. The focus of care should shift towards personal assistance aimed at extending independence, rather than highlighting a loss of it. Advances in technology and medical care are altering residents’ needs, adding complexity but also indispensability to the sector’s amenity offerings.

The sector’s broad reach, potentially spanning up to 40 years of a resident’s life, presents both challenges and opportunities. While this breadth calls for more market players and more diverse models, it also creates a unique dilemma: the rising average age of residents may also operate to deter younger entrants, a situation exacerbated by the current supply-demand imbalance.

For the sector to realize its full potential, stakeholders must navigate a series of challenges, from planning and regulation to public perception and education.

With 2023 marking ten years since the AIFMD was adopted in Europe, our pan-European team, including Cheryl Bai, Andrea Lennon, Tim Ridgway, and Pierfrancesco Rinaldi, reflect on the impact of the regulatory initiative, how different European jurisdictions have adapted, and what the future holds…

Q: What’s been the biggest impact of AIFMD on the alternative landscape over the past ten years?

Cheryl Bai (CB): There’s no doubt the AIFMD has had a significant impact on the alternative funds industry in Europe since its implementation in 2013. In particular, the comprehensive framework introduced by AIFMD for alternative investment managers (AIFMs) has resulted in increased transparency and risk management requirements, which in turn has brought about better investor protection. However, it’s also increased operating costs for Fund Managers due to the additional compliance, reporting, and disclosure requirements.

Pierfrancesco Rinaldi (PR): In some cases, we’ve seen that the Directive has meant that non-EU fund managers wishing to approach European LPs have had to make substantial modifications to their operating models, strategies, and use of vehicles. We’ve certainly seen managers starting to invest more in technology and personnel to meet their regulatory obligations stemming from AIFMD.

Andrea Lennon (AL): Another of the more significant impacts has been on delegation and the use of outsourced providers. The delegated model means that risk management can be retained by the AIFM and investment management can be provided by experts across the globe. The ability of AIFMs to delegate investment management to qualified experts has enabled the broad adoption of the third-party AIFM model.

Q: Has the AIFMD succeeded in its objective to protect investors?

PR: Overall, the evidence is that the AIFMD has succeeded in realizing its objectives. By creating an EU market for alternative funds and requiring AIFMs to act with transparency towards investors, our observation is that investors have become comfortable with the regulatory framework created by the AIFMD and that the supervisory environment it has brought about is considered sufficiently robust to preserve the probity and integrity of the European alternatives market.

Q: How has the private placement route to market evolved – is it still a popular option through Jersey?

Tim Ridgway (TR): We see that for certain alternative investment strategies, Jersey remains a popular choice for fund domiciliation within the context of the AIFMD, offering a number of key attractions, including the cost-effective and user-friendly ‘Jersey Private Fund’ product.

Through Jersey, managers can continue to access European capital, taking advantage of National Private Placement Regimes (NPPRs) to market to professional investors in Member States, while complying with certain conditions. In the ten years since AIFMD’s introduction the private placement approach through Jersey has become ‘tried and tested’ – and in fact, the flexibility it offers has made it an important means for non-EU managers who don’t need full EU-wide coverage to access EU capital.

Q: How have EU locations like Ireland and Luxembourg adapted to life under AIFMD?

PR: Thanks to Luxembourg being quick to implement the AIFMD, the country has earned a reputation as a major EU alternatives hub, with over €1,600bn in assets under management. The AIFMD is now seen as an integral part of Luxembourg’s overall funds toolbox, attracting approximately 300 ManCos/130 SuperMancos, and 260 AIFMs.

AL: Ireland has also embraced AIFMD, with the industry being quick off the mark to roll out enhanced services to support alternative asset managers while also protecting investors. Since the launch of the Qualified Investor Alternative Investment Fund (QIAIF), which replaced the pre-AIFMD QIF (Qualified Investor Fund), Ireland has seen assets in Irish-domiciled alternative products grow to over $800 billion.

The complexity of the AIFs managed under AIFMD has helped in further evolving the already well-established Irish fund services industry which has led to an increase in service providers offering oversight and governance services such as third-party AIFM and Real Assets Depositary. It’s also created new opportunities for the Irish market, for instance in Risk and Compliance and niche training and development in applied alternatives and valuation processes.

Q: What’s the UK response been like, particularly in light of Brexit?

CB: As the largest European center for alternative asset management, the UK played a significant role in the introduction of AIFMD by actively participating in negotiations and contributing expertise that led to its creation.

Following Brexit, however, UK AIFMs were no longer automatically entitled to AIFMD passporting rights. They needed to register their funds in each of the relevant EU Member States, in line with NPPR rules, to obtain approval for marketing their funds in that jurisdiction. Although that initially was a cause of some concern, the UK has since implemented its own version of AIFMD, largely aligned with the original AIFMD but tailored to the UK’s specific needs and objectives. This framework aims to maintain a similar level of investor protection and oversight as the original directive.

Q: So what’s next on the horizon in terms of the AIFMD evolution?

PR: What will be interesting now is to see how AIFMD evolves in line with industry trends – in particular the outcome of the latest review, commonly referred to as AIFMD II. Its purpose has been to review some technical aspects of the regulation rather than a reshaping of the legal framework – and a provisional agreement was reached between the Council of the European Union and EU Parliament in July 2023. That now requires formal approval.

AL: One key area is how National Competent Authorities (NCAs) have interpreted and enforced the legislation. This is particularly significant where an AIF distributes across a number of EU jurisdictions, leading to additional reporting requirements in different EU locations.

CB: As far as the UK is concerned, there is undoubtedly appetite to enhance its appeal as a center for funds work – following a government review last year, for example, the Financial Conduct Authority introduced rules for Long-Term Asset Funds (LTAFs) while the government has introduced a new tax regime for Qualifying Asset Holding Companies (QAHCs). All this shows that the UK is keen to establish a robust and fit-for-purpose environment for the funds industry – and of course, that needs to sit comfortably alongside the evolving European and AIFMD proposition.

TR: Looking forward, the key is going to be collaboration, as the European regulatory landscape continues to evolve. So whether it’s our team in Jersey, the UK, Luxembourg, or Ireland, our focus will be on working in a joined-up way and flexibly, to accommodate the structuring preferences of clients based on the profile and jurisdiction of their target investors

Originally Published in I&PE Real Assets

The real estate sector is witnessing a confluence of trends and challenges that are reshaping its very fabric.

This evolution is significantly influenced by generational changes, affecting everything from workplace design to residential preferences.

What are the implications of these shifts for key players such as stakeholders, investors, and end-users? In what ways are different generations like Baby Boomers, Gen X, Millennials, and Gen Z shaping institutional real estate, and what broader impacts do their preferences and concerns have?

One major shift, driven by aging Boomers, is the growing demand for senior living facilities and healthcare properties. Europe, including the UK, is experiencing a significant demographic shift due to an aging population, driven by low fertility rates and increased life expectancy.

EU statistics indicate that the EU-27’s older population will rise from 90.5 million in 2019 to 129.8 million by 2050, with those aged 85 and over more than doubling to 26.8 million. Similarly, in England, the population over 50 has increased by 47% in the last 40 years, with 18% currently over 65. This trend is expected to continue, with the number of people over 80 set to more than double in the next 40 years, while the under-20 population is projected to decline, according to figures cited by PwC.

Identified as a “megatrend” in their recent “Emerging Trends in Real Estate Europe 2024” report, data points to an expanding market for specialized real estate. There has been a remarkable 650% increase in investment in retirement and assisted living sectors from 2007 to 2022. According to Knight Frank, 67% of investors planning to enter the market by 2028. This means now is an opportune moment for investors looking to position themselves in a sector that may be on the cusp.

However, capitalizing on this opportunity comes with challenges. The planning process, often misaligned with modern ESG considerations, poses a significant barrier for ESG-minded investors. Fire regulations, currently under intense scrutiny, add complexity but also present an opportunity for innovation in creating safer, more sustainable communities.

Challenges also arise from public perception and local governance. Integrating specialist later-living housing into local planning guidelines is essential, with some suggesting it as a solution to housing crises in the Western world. The concept of “right-sizing” is key, encouraging older generations to consider later living facilities earlier, and so freeing up the stock of existing homes.

The quality of the new assets which have been built so far are high. For example, senior residences are being built to be more than just residential spaces; they’re integrated environments offering entertainment, health, wellness, and social services, blending independence with care, operating more as a little village than a traditional “nursing” or “retirement” home, with some managers and operators offering prospective customers a “try before you buy” deal to experience and perhaps acclimatize a little to a new way of living.

The current market, however, is struggling to keep up with the growing demand for these specialized facilities. This gap presents a unique opportunity for investors, asset managers, and their developer partners to expand into this sector. Some see it as “social infrastructure” – crucial in fulfilling societal needs beyond traditional revenue generation. This change signifies a shift in the industry’s role and responsibilities. Accordingly, investment strategies are adapting, focusing on developing senior living facilities and healthcare properties and it is expected that new development will address this gap, according to pension funds taking part in recent surveys.

The need for this social infrastructure coincides with a new generation within the institutional real estate workforce who are gaining seniority and happen to want to build ESG-friendly assets. The diversity of generations in the workforce is reshaping real estate development. This is evident in the increasing popularity of flexible co-working spaces and a heightened preference for eco-friendly amenities. These shifts are reflective of larger societal movements and are influencing the types of assets and funds available within institutional real estate.

Our own research into demographic change within the real estate workforce explores how the presence of Gen Z, working together with Boomers, Gen X, and Millennials under one roof, is redefining what sort of real estate assets will become available for investment in the future.

The report, entitled “From Boomers to Zoomers: How Generational Shifts Are Impacting the Future of Real Estate,” says 80% of asset managers acknowledge the profound impact of this generational shift on the real estate workforce. It’s shaping investment and development strategies, with younger generations’ preferences for ESG and sustainability across all assets. This touches on all facets of real estate but is felt most keenly around the positive social and environmental impact developments are having. No wonder: Gen Z shows a 100% preference for green amenities within assets, the highest of any other generation.

This generational shift, coupled with an aging population, is creating a transformative ripple across the institutional real estate sector. Property development is increasingly focusing on holistic environments that cater to health, wellness, social interaction, and sustainability.

For investors and asset managers, this presents an opportunity to innovate with mixed-use developments, smart technologies, and eco-friendly amenities. After all, the success of the real estate industry hinges on our collective ability to adapt to these changes, integrating sustainability and social impact to meet the diverse needs of evolving demographics.

Originally Published in Private Fund CFO

In the dynamic global financial landscape, North American fund managers in particular are increasingly setting their sights on Europe as a promising source of alternative capital, domiciling new funds there at the fastest rate we’ve seen in recent years.

Data shows that over the last 12 months, North American fund managers who launched a fund in the US also domiciled that fund in Europe 60% of the time. This suggests a growing recognition of the benefits offered by European jurisdictions, such as robust regulatory frameworks and access to European markets. Indeed, many see Europe as an opportunity to diversify their investor base.

In terms of preferred European domiciles, North American managers showed a preference for Luxembourg (50%) and Ireland (50%), followed by the Channel Islands (25%), for those looking to launch a fund over the next 12 months.

For several years now, Ireland has been gradually chipping away at Luxembourg’s market position and the fact that North American fund managers are now just as likely to establish their funds in Ireland as in Luxembourg, is an interesting development in itself. This represents a subtle yet significant shift, suggesting that Ireland has become the default alternative to Luxembourg for North American fund managers.

This shift underscores Ireland’s growing prominence as a hub for alternatives, a trend that’s likely to continue given the country’s transparent and well-regulated funds environment, a proven track record in alternative investments, and a deep talent pool experienced in setting up and running alternative funds. Its position within the EU does make it a compelling alternative to Luxembourg for many and that’s reflected in the conversations we’re having with managers around the world, not least in the US.

Of particular interest to North American alternative fund managers will be the Investment Limited Partnership (ILP) and Qualifying Investor Alternative Investment Fund (QIAIF) fund structures.

The ILP is a common law partnership structure that is particularly suited to private equity, real estate, and other closed-ended alternative investment strategies. It is a regulated vehicle with a flexible framework that allows for contractual freedom to agree on partnership terms while providing a high degree of investor protection. It has been designed in large part to appeal to US-based investors. QIAIF is a regulated fund structure aimed at sophisticated and institutional investors.

It has no investment or borrowing restrictions, making it a flexible choice for alternative investment strategies, including private equity, real estate, private debt, and other types of alternative investment funds. For US fund managers, the QIAIF offers several advantages. First, it can be marketed across the EU via the Alternative Investment Fund Managers Directive (AIFMD) passport. Second, it has a fast-track regulatory approval process, with authorization typically granted by the Central Bank of Ireland within 24 hours of application, provided they have an authorized AIFM. Third, it can avail of Ireland’s extensive network of double taxation treaties, which can provide for reduced rates of withholding tax on income received by the QIAIF.

QIAIFs can be established in various legal forms and can be open-ended, limited liquidity, or closed-ended, offering structural flexibility to cater to diverse investment needs and strategies.

The recent amendments to Ireland’s Alternative Investment Fund (AIF) rulebook, coupled with the enactment of the ILP Act, have boosted the adaptability and allure of Irish fund structures. The allure of Ireland is boosted as Luxembourg has recently been oversubscribed for new fund launches, meaning there have not physically been enough staff on the ground to launch all the funds for managers who would have liked to be there. Ireland has naturally been a net beneficiary of this situation.

Luxembourg is still the largest fund domicile in Europe and one of the most popular worldwide.

According to May 2023 data from the Luxembourg Private Equity Association (LPEA), Luxembourg hosts over €500 billion ($590 billion) in private equity assets, making up 8.6% of its financial center. The LPEA counts 183 private equity and venture capital investors and fund managers among its 450 members. The number of private equity funds domiciled in Luxembourg has grown significantly from 199 in 2017 to 1,789 in 2021, representing about 67% of the total European ETF market. The most common types of funds are Fund of Funds and Buyout funds, primarily originating from the UK, Switzerland – and the US.

The UK, despite Brexit, remains an attractive destination, offering a well-established framework for alternative fund managers. The UK has been proactive in making itself a more appealing location to manage alternative investment funds, with the relatively new Long Term Asset Fund and Qualifying Asset Holding Company regimes serving as examples.

Jersey, while not part of the EU, is another well-regarded domicile for alternative investment funds. The island’s political and economic stability, coupled with a wide range of fund structuring options, make it very attractive for managers and investors alike. The Jersey private fund structure, for instance, offers easy and cost-effective marketing into the EU through National Private Placement Regimes, although it may not provide the full range of benefits associated with an EU passport.

When it comes to investment strategies, North American managers are particularly optimistic about growth capital and buyout strategies, planning to increase their allocations in these areas over the next 12 months. With regulatory compliance weighing heavily on fund managers, the selection of jurisdictions, like Luxembourg, Ireland, and Jersey, which all have clear and established regulatory systems and access to the EU market, is a sensible strategy.

These strategic choices of domicile by North American managers, their focus on growth capital and buyout strategies, and their cognizance of regulatory compliance requirements collectively exhibit dynamic adaptability. These factors are undoubtedly going to influence future trends and directions in global fund management.

What is FATCA / CRS?

Both FATCA/CRS are pivotal regulatory and reporting frameworks designed to combat offshore tax evasion. FATCA and CRS have far-reaching impacts on the investment fund industry, requiring investment funds to enhance onboarding processes, collect additional information on investors, and develop reporting processes and procedures.

In United States law, the Foreign Account Tax Compliance Act (FATCA), which came into effect on July 1, 2014, is intended to reduce the levels of tax avoidance by U.S. citizens and entities through foreign financial institutions (FFIs).

Globally, the Organization for Economic Cooperation and Development created the Common Reporting Standard (CRS) to facilitate the automatic exchange of information.

The overarching goal of both the FATCA and CRS frameworks is to give governments a more transparent view of the financial assets their citizens hold in foreign accounts. Though their goals are similar, the FATCA and CRS frameworks have many important differences.

Who Must File?

FATCA and CRS reporting obligations apply to Financial Institutions, a term which is broadly defined and generally captures entities’ investment management functions, as well as investment funds themselves.

To ensure proper compliance with the FATCA and CRS legislation, it is imperative that investment funds and investment managers are properly classified and duly registered for FATCA purposes with the IRS, the Department for International Tax Cooperation in the Cayman Islands, or in other local jurisdictions.

Compliance with FATCA and CRS requires meticulous record-keeping, form validation, and ongoing monitoring of investment accounts and investor demographic information. Here, we delve into the essential services offered in Gen II Tax compared to other providers in the industry.

Why Choose Gen II Tax Services?

Gen II Tax offers a comprehensive suite of services to ensure FATCA and CRS compliance. They handle everything from initial data collection and form validation to ongoing monitoring and reporting. Other providers may offer similar services but might lack the depth and integration that Gen II Tax provides.

 

Tax Services

Other Providers

Gen II Tax

FACTA & CRS Processing

Fully maintain relevant Fund investor/entity information required by FATCA and CRS regulations

Case by Case

Included

Perform the required form validations and perform jurisdictional indicia checks required under FATCA and CRS for each investor

Case by Case

Collection of appropriate IRS tax forms (Form of W-8 or W-9) and/or withholding certificates and tax residency self-certifications

PBC Reliance

Collecting the appropriate self-certification forms for investors, including identified Controlling Persons and supporting documentation.

PBC Reliance

Reviewing the forms for completeness, accuracy, and validity to determine sufficiency for FATCA and CRS classifications

Included

Verifying an Investor’s GIIN against the IRS FFI List for the purposes of the US IGA

Case by Case

Ad-hoc reporting for relevant Fund investor/entity information required by FATCA and CRS regulations

Out of Scope

Ongoing FACTA & CRS Monitoring

Monitoring tax forms for expiration, as applicable and, where required

Included

Included

Request new forms from Investors within a reasonable time before such expiration

PBC Reliance

Monitoring for any additional information received from the Fund, or an investor, and updating the investor’s CRS classifications

Included

Ongoing validation of Investors’ GIINs against the IRS FFI list as necessary and monitoring for any additional information received from the Fund, or an investor, and updating the investor’s FATCA statuses

Case by Case

Additional Services

U.S. Federal Tax Withholding Assistance

Not Included

Integrated

Rate Valuation

Not Included

Investor IMY Package Creation and Maintenance

Not Included