Real Estate fund matters - Alfi

ALFI WG Real Estate Investment Funds Sub-Committee - January 2009
Frequently Asked Questions - Luxembourg
Real Estate Investment Funds (“REIFs”)
FAQ 1s Financial framework / Valuation of Properties / NAV / Financial Reporting
• Disclosures with respect to covenant breaches are inadequate
• There is doubt as to the ‘going concern’ basis of the fund;
• Disclosures with respect to the ‘going concern’ basis of the fund are inadequate.
• Assumptions and judgments made by management in respect of the ‘going concern’ basis of the fund are
inaccurate or inappropriate.
6.6 6BUWhat actions should be taken by the Central Administration / Custodian?
6.6.1 24BCentral Administrators should work closely with the fund manager and fund’s Board to assess:
• What values should be included in the accounts for the NAV calculation, if the independent valuation
report includes a valuation uncertainty paragraph or a caveat to the valuation. The ultimate responsibility
lies at Board level, who can ultimately decide whether or not to include impairment in the accounts.
• What additional disclosures (if any) in the notes to the accounts of the financial statements are required.
6.6.2 25BNo
special actions need to be made by Custodians in relation with the above. The provisions of Chapter E of
IML Circular 91/75 (the “Circular”) are still applicable and provide for the regulatory framework regarding all
Luxembourg funds irrespective of their legal form or regime. According to the Circular, the custodian “has to
have knowledge at any time on how the assets of the fund have been invested and where and how these assets
are available”. The custody obligation has to be understood in the sense of supervision rather than safekeeping.
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