New EPRA Chief Sees Opportunity to Expand REITs into Poland, Sweden

Dominique Moerenhout, the new CEO of the European Public Real Estate Association (EPRA), joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Moerenhout commented on the political climate in Europe and its impact on the listed real estate market. He noted that the level of uncertainty has “retreated substantially” since the election of Emmanuel Macron as president of France. However, “a major question mark remains today over the timing and outcome of the elections in Italy,” he added.

According to Moerenhout, the impact of politics on Europe’s listed real estate market has been no greater than that seen in the broader equities market.

Moerenhout also discussed some of the key items on EPRA’s agenda.

Moerenhout noted that Poland and Sweden offer EPRA the biggest opportunities to expand the REIT regime in Europe. EPRA is currently involved in lobbying property companies and regulators in both countries, Moerenhout said.

Efforts in Poland are more advanced than in Sweden, according to Moerenhout. He noted that a REIT regime bill could be expected in Poland by the beginning of 2018.

Other items on EPRA’s agenda include the targeting of generalist investors. “This is really the top priority for EPRA today in Europe,” Moerenhout said.

While it may take time for generalist investors to move into the listed real estate sector, “we are all convinced that we will succeed and they will swap their asset allocation,” Moerenhout said.

At the same time, EPRA is actively involved with trying to reduce the capital requirements for real estate equities under the European Union’s Solvency II regulations.

EPRA’s goal is to reduce the capital requirements to the same level as for direct real estate investments, Moerenhout said. “We have to convince the European Commission that investing in the listed real estate sector is not more risky than investing directly in bricks,” he noted.

Moerenhout said the European Commission has opened a midterm review of the solvency regulations, thereby creating a “window of opportunity” for EPRA.

“This could have a massive impact on the total market capitalization in Europe, maybe even doubling it in size,” Moerenhout said.

Additional priorities for EPRA include addressing generalist institutional investors’ growing interest in environmental, social and governance (ESG) matters, he added.