Expo Real: Virtual Platform helps make Real Estate Investment Funds AIFMD-compliant

Virtual Data Room, Drooms will be presenting its virtual platform namesake at this year’s Expo Real (booth C1.230). The Drooms platform assists real estate investment fund managers in meeting the reporting requirements set down in the EU’s “Alternative Investment Fund Managers Directive“ (AIFMD). In accordance with those requirements, it also provides users with centralized storage of documentation and lets them better manage reporting to regulatory authorities, investors and stakeholders. It also enables them to remain constantly prepared for any potential future transaction.

Although the AIFMD directive has been in effect in Germany since 22 July 2013, the stricter rules set down in the directive will be applied to open and closed-end property funds that were on the market prior to that date, at the close of an interim period ending on 22 July 2014. According to Drooms General Manger Jan Hoffmeister, “This year-long grace period is vitally important to many property fund vendors, who have so far failed to adequately prepare themselves for the consequences of the AIFM directive.“ This view is corroborated by a recent poll conducted by the property investment consulting firm of Knight Frank in collaboration with Drooms. According to the poll, 63 percent of property investors queried expect a reduction in the number of fund managers as a result of AIFMD.

“The poll results show that the European investment sector is facing profound changes brought about by the implementation of AIFMD,“ Hoffmeister points out. According to the organizational requirements set down in the AIFM directive, AIFMs are required to create, implement and maintain effective internal reporting and sharing of information to all relevant levels of the AIFM, as well as an adequate flow of information to all participating third parties. This will result in entirely new demands being placed on all aspects of communication between the parties involved. “Since AIFMD imposes greater responsibilities on fund managers with respect to asset management, this means that finding ways to simplify this process will become all the more important,“Hoffmeister adds. The answer can be found in the customized package of measures made up of the virtual platform Drooms and a range of consulting services.

The virtual data room lets fund managers reduce market risks by ensuring that their underlying assets are poised for any potential transaction. Drooms can also make the handling of illiquid assets, like real estate funds, significantly less complicated. In addition, Drooms assures easy access to documents required for NAV (net asset value) appraisals. This facilitates the annual valuation requirements of third parties as stipulated by AIFMD.