Working closely with investment managers, investors and intermediaries for many years now, we have learnt that the delivery of registrar services for Real Estate Funds is a specialist area that doesn’t necessarily fit well within the skill set of more generalist registrars.
In this article we explore some the challenges that investment managers and registrars face.
Why are these services important?
A registrar acts as the gateway to your investors for the majority of the communications and cashflows. It is therefore imperative that all interactions are timely, accurate and completed with the highest professional standards. Any performance issues with the registrar reflect badly on themselves and, more importantly, the investment manager.
Investors’ expectations over the standard of communication and timeliness of responses to queries are increasing as their own reporting requirements develop. An excellence in investor communication can be a clear differentiator for an investment manager so the ability of a registrar to deliver this on your behalf is critical. This represents a real challenge to many generalist registrars whose skills, systems and processes are not built around the operational demands required by Real Estate Funds.
The importance of this function, when coupled with a history of poor service delivery, can lead some investment managers to become overly involved in the performance of the registrar services. Leading to duplication, inefficiency and the investment manager’s resources being diverted from what is strategically important – portfolio and risk management.
It is therefore crucial that the investment manager partners with a registrar who specialises in the provision of registrar services to Real Estate Funds and has a proven track record in delivering these services.
Why are Real Estate Funds different?
Real Estate Funds have a number of quirky and unusual characteristics in how they engage and interact with investors. To us, these unusual characteristics are part and parcel of operating a Real Estate Fund but to a generalist they can present significant challenges to their operating model. Examples include:
+ A high level of secondary market trading and unit transfers
+ Liquidity and redemption windows
+ Commitment queues
+ Monthly / quarterly income distributions
+ Complex income distribution calculations
+ Withholding tax deductions
+ Specific tax requirements (e.g. UK NRL status) and reporting
+ Frequent extraordinary general meetings and proxy voting
+ Fee rebates and other investor payments
+ Interface with multiple banking platforms and the need to securely transfer large volumes of payment instructions
+ Involvement of multiple third parties – trustees, manager, accounting team, investor services team
+ Prescriptive and evolving KYC / AML requirements.
Every Real Estate Fund has slightly different, and often very prescriptive, characteristics. Understanding these requirements and implementing efficient and effective processes are fundamental to the successful operation of a Real Estate Fund. More often than not, this will require tailored processes and solutions for each structure.
As an example, we recently migrated nine funds for one of the UK’s leading institutional Real Estate houses to our platform. Whilst all funds have their own complexities, one had a particularly unusual distribution waterfall which has previously relied upon a spreadsheet calculation. As part of our take on process we were able to use our specialist system to model this waterfall calculation and offer a robust systems solution by the time we went live.
We have extensive experience of both launching new funds and migrating existing funds onto our platform and delivery model and are always happy to discuss requirements and ways in which we can add value to Real Estate Fund operations.
To find out more why we are the bright alternative in fund and corporate services, explore our website or speak with James Duffield, our Head of Business Development.
If you would like to discuss outsourcing to the Aztec Group or are considering migrating a fund or SPV, please contact James Duffield, our Head of Business Development on +44 20 3818 0250.
Aztec Group Guernsey
Aztec Financial Services (Guernsey) Limited
PO Box 656, East Wing, Trafalgar Court
Les Banques, St Peter Port, Guernsey, GY1 3PP
Telephone: +44 1481 749700
Facsimile: +44 1481 749749
Video Conference: +44 1481 725947
Aztec Group Jersey
Aztec Financial Services (Jersey) Limited
Aztec Group House, PO Box 730
11-15 Seaton Place, St Helier, Jersey, JE4 0QH
Telephone: +44 1534 833000
Facsimile: +44 1534 833033
Video Conference: +44 1534 832002
Aztec Group UK - London
Aztec Financial Services (UK) Limited
2 Throgmorton Avenue
Telephone: +44 20 3818 0250
Aztec Group Luxembourg
Aztec Financial Services (Luxembourg) S.A.
7, Rue Lou Hemmer, L-1748, Luxembourg – Findel
Grand-Duché de Luxembourg
Telephone: +(352) 24 616 000
Facsimile: +(352) 24 616 016
Aztec Group The Netherlands
Aztec Financial Services (Netherlands) BV
Spaces Zuidas, Barbara Strozzilaan 201
1083 HN Amsterdam, The Netherlands
Telephone: +31 20 794 4820
Facsimile: +31 20 794 4821
Aztec Group UK - Southampton
Aztec Financial Services (UK) Limited
Forum 3, Solent Business Park
Parkway South, Whiteley, Fareham, PO15 7FH
Telephone: +44 238 202 2300
Facsimile: +44 238 202 2309