quarterly-Public-Affairs-Q2-2023

EPRA Regulatory & Taxation Brief

EPRA REGULATORY & TAXATION - QUARTERLY BRIEF

The pathways for a mutual recognition of REIT regimes
With 14 REIT frameworks across Europe, the long-term advocacy target on EU level is to address a mutual recognition of REIT regimes as part of a solution to the high-level policy theme of the ‘pensions gap’. For this, the Public Affairs team has prepared an extensive outreach plan, involving the European Commission, Member States and stakeholders from the real estate and pension industry. As a second layer, the Public Affairs team has identified a shorter-term opportunity on OECD level, where EPRA is aiming to ensure that the final guidance on the landmark Pillar 2 tax agreement incorporates additional LRE reflection in a way which should facilitate a mutual recognition of REIT regimes amongst member jurisdictions of the agreement.

EU Taxonomy update
In June, the Commission approved its new set of EU Taxonomy criteria for the remaining four environmental objectives. EPRA provided the Commission with its input as part of the formal consultative process. After years of raising the concerning status of renovations in the Climate Taxonomy, we are pleased to see the advocacy results reflected in listing renovations as sustainable, as opposed to transitional, environmental economic activity. Read the EPRA advocacy material here. Read EPRA’s feedback to the Commission on the new Taxonomy, where we recommended to extend explicitly the application of relevant activities to listed real estate here.

SFDR update
Together with the EPRA SFDR working group, the team worked on a high-level letter on the Sustainable Finance Disclosure Regulation (SFDR) which was sent to selected European Commissioners on 1st of June. In addition, we jointly worked on the submission to the European Supervisory Authorities (ESAs) to provide them with an input on specific SFDR reporting indicators where we welcomed the efforts to not only improve SFDR’s usability but also to enable application of the Article 9(3) aiming at reducing carbon emissions. The EPRA team also met with the Commission in person to discuss further areas of SFDR, sought clarifications and suggested improvements. Read relevant material here & here.

Retail investment strategy
The Commission unveiled its long-awaited retail investment strategy, aiming to remove barriers to cross-border investment and encourage increased retail investment within the EU's capital markets. EPRA seized the opportunity to address the persistent challenges faced by REITs when involved in cross-border investments, restricting the sector’s growth. We stressed the importance of addressing those obstacles and called for European-level soft-law intervention to promote a REIT mutual recognition among Member States with a view to offer retail consumers increased incentives to utilise adequate investment vehicles. Submission is available here.

Joint EPRA/INREV/RICS EPBD Working Group
Together with INREV and RICS, EPRA created a joint working group dedicated to the Energy Performance of Buildings Directive (EPBD). The objective of the working group is to provide more information to EPRA members on the challenges introduced by the changes to the existing EPBD and learn from each other’s experiences. Join us for an exclusive webinar on 18th September, as we unveil the EPBD working group, discuss the interplay of energy efficiency, carbon requirements, and the legislative impact of the Directive. Register here.

Sustainable Finance educational campaign
With its second sustainable finance infographics, EPRA continued the work on a tailored series to explain the role listed real estate plays within capital markets and why it is a strong partner in scaling up investments in green transition with impact. This time, the focus is to differentiate the business model of listed property companies with others such as developers or construction companies. See here the infographic.

Comparative summary table of European REIT regimes
Starting this year, EPRA’s flagship publication, the Global REIT Survey 2023, will feature a summary table of the European REIT regimes. This table will condense the extensive and technical chapters to provide a comparative overview of European regimes in a convenient format, allowing readers to quickly grasp the key characteristics of the 14 European REIT frameworks.

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