16 July – LAWFUEL – The Law News Network – Allen & Overy (A&O) represented HBOS on the structuring and formation of a new pan European property fund for its fund management arm, Insight Investment. The Fund, Insight European Real Estate Trust (IERET), is a closed-ended tax efficient vehicle incorporated in Luxembourg, and has been flexibly structured with the intention of opening the vehicle to external investors by floating it in about 18 months. It is believed to be the first ever major investment fund for pan-European property designed to be listed with all the features of a conventional real estate investment trust (REIT) as well as optimum tax efficiency.
A&O’s role included devising the fund structure as well as forming a series of fund and holding company vehicles. Regulatory, Funds and Financial Products partner, John Goodhall, said “What is novel about this product is that it is designed to be listed and behave more like a conventional REIT than a private fund, but at the same time invest right across Europe, without compromising tax efficiency in any of its target jurisdictions. REITs and similar listed products have been used for purely domestic funds for some time but never before have the same techniques been applied to a multi-jurisdictional offering such as this. Over time this may well become the structure of choice for anyone wanting to create a publicly traded fund for European real estate. We are delighted to have helped HBOS to bring this ambitious project to fruition.”
The fund has been seeded with debt and equity from HBOS totalling €600m and will acquire commercial real estate in western Continental European markets. The first property acquisition has already been made in Spain, with advice on this acquisition given by A&O’s Madrid office.
A&O also advised HBOS on the loan and security package for the fund. “This is a ground breaking transaction that represents a significant investment in Europe for HBOS. This is the first time a bank has structured a fund of this nature and the transaction has involved our European network and our corporate, tax, banking and real estate capability. This demonstrates the integrated offering our network is able to provide across the capital structure on fund transactions of this type. We were very pleased to be entrusted by HBOS to advise on this deal”, said Allen & Overy partner Sanjeev Dhuna.
The fund structuring and establishment was led by partners Robert Porter and John Goodhall, with assistance from Catherine Taddei and David Foster, as well as A&O funds and tax specialists throughout Europe. Partners Ian Powell and Sanjeev Dhuna led the banking team which included associates Melissa Samuel and Heather Roberts.