The future of German real estate funds under the draft implementation act of the AIFMD

Hans-Marin Helbig,LLM, Analyst Habona Invest GmbH Christian Alexander Mecklenburg-Guzmáns, House of Finance, Goethe University, Frankfurt,

The discussion draft on the implementation of the Alternative Investment Fund Directive (‘Draft’) dated 20 July 2012[1] has met severe criticism. It signals the end of the light-touch approach of the alternative investment industry. Moreover, it envisages major statutory changes, since it introduces a ‘Capital Investment Act Book’ (‘KAGB’)[2] which shall replace the enacted German Investment Act (‘InvG’) and take effect as of July 2013 as mandated by the Alternative Investment Fund Directive (‘AIFMD’). The KAGB introduces a new regulatory framework for the German fund industry. Beyond the provisions of the AIFMD, funds such as the open-end real estate funds will cease to exist; or be continued in the form of closed-end funds, which will be henceforth subject to the extensive regulation concerning the licensing, investment restrictions, leveraging and distribution. Currently, there is no evidence of other European member states intention to introduce similar requirements.