This practical guide seeks to give an overview of the financial service sector regulatory framework focusing specifically on wealth and asset management, banking and insurance institutions.
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Real Estate, Hospitality & Construction
Building your business future
Today’s real estate industry must adopt new approaches to address regulatory requirements and financial risks, whilst meeting the challenges of the current economic environment and achieving sustainable growth.
Luxembourg has emerged as the leading domicile in Europe for vehicles investing directly in internationally diversified real estate portfolios. Key factors behind Luxembourg’s success include the flexible legal and fiscal environment, the ability to structure cross-border investment strategies and investors’ desire to diversify their portfolios.
Our real estate practice has the ability to mobilize a team of seasoned professionals to address complex and demanding challenges and provide seamless service on a global basis. We can help move you forward. Are you ready to break ground?
In working with you, we draw on our industry knowledge and insight to help you strategically position yourself – wherever you are in the world. Let us help you better understand some of the key challenges facing the industry, including:
- Real estate IPOs
With fewer financing options available, companies increasingly are looking to IPOs to raise equity, using the proceeds to refinance portfolios, make new investments or to provide owners and investors with the opportunity to liquidate their holdings.
The IPO value journey
We can help you evaluate your options and assist you throughout the entire process, including working through the challenging accounting and tax issues. Although the IPO event itself generally lasts 90 to 120 days, the IPO value journey begins at least a year or two before the IPO and continues well beyond it.
Even when the financial climate is not ideal for fund raising, it could be a good time to begin planning for an IPO, while you wait for markets to settle.
The IPO journey is not easy, but with the right people and careful planning, real estate companies can navigate the long road from private to public ownership.
- Regulatory and technical accounting changes
Major regulatory and technical accounting changes are occurring in the US, Europe and other geographies, which has created a challenging environment for real estate, hospitality and construction organizations. These include the Dodd-Frank Act, the Alternative Investment Fund Managers Directive (AIFMD) and proposed accounting changes for leases and revenue recognition from the Financial Accounting Standards Board and International Accounting Standards Board.
We are committed to helping our clients understand how to approach these changes. We advise funds on SEC examinations and help them assess, design and implement compliance programs. Effectively navigating the sophisticated marketing regime required by the AIFMD will be a key challenge and could lead to a competitive advantage for alternative investment groups. Considering the potential implications of leasing and revenue recognition early on is important, because what organizations do today in preparation can have a significant effect on their business tomorrow.
- Green buildings
The world is turning green, and as the benefits of going green become clearer and more affordable, tenant and investor demands for sustainable buildings are increasing. Construction and engineering companies around the world are building more and more environmentally friendly buildings, and existing buildings are being upgraded to meet these standards as well. Green buildings can also have a demonstrable impact on the corporate bottom line.
Our global team can advise you on:
- The cost and benefit analysis of energy applications
- Achieving specific green building certification standards, such as the Leadership in Energy and Environmental Design (LEED) green building rating system, which has been introduced around the globe
- Tax credits and incentives available – at the federal, state and local level in countries around the world – to improve the energy efficiency of buildings, which could possibly outweigh the cost of certification standards
- Cost reductions, operational efficiencies and other rewards that can have a direct impact on a company’s performance and results
- Real estate private equity
The recession, financial crisis and pullbacks in the credit market have all impacted real estate private equity funds over the past several years. Given the challenging environment that still remains, it is more important than ever to understand the trends affecting the sector so you can respond effectively.
Key trends include:
- Distressed deal opportunities will continue, and convergence of the bid-ask spread will foster greater deal volumes.
- Due to regulatory and financial reporting changes, the fund operating models will change over the medium to long term.
- Overall, fund terms have not come back to where they were pre-crash, and many real estate fund managers have had to make investor concessions.
- Investors are now more focused on scrutinizing the real estate fund platforms where they are placing capital. More information will be needed to meet investors’ reporting requirements.
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The ULI/EY real estate consensus forecast
Get a snapshot of what’s to come in the real estate market with our three-year forecast — a collaboration with the Urban Land Institute.
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