Real Estate Management: from letter-box company to ‘substance of form’

29-9, 2017

Corporate Service Providers poured into fog, which was confirmed by the impact of the Panama Papers. In response to the global outrage that followed, a stricter regulation was soon demanded. Has something changed in the meantime? And does this have consequences for the property industry? Rob de Groot, earlier this year appointed as Director Management Services at Equity Estate, has been very active in the past years as statutory director of Dutch entities for international organisations in the banking, telecommunication and real estate sector. In this article, De Groot indicates the meaning of changing laws in corporate services activities for the real estate sector.

The Netherlands as leader

The Netherlands plays a very prominent role in the world of international (tax) structures. Extensive research shows that The Netherlands is leader as a so-called ‘Conduit-OFC’, a country through which a lot of funds flow. This happens by using Dutch entities (private companies, limited companies, cooperatives, etc.), that are in a legal structure between the ultimate owner and the companies where the activities are actually taking place. As these companies are located in several countries, and because often also more entities are part of the structure, the picture of a cluttered web arises.

Taxability is one of the reasons to build such a web. An organisation can furnish the cost item ‘taxes’ in such a way that savings can be made. The Netherlands is also a much-chosen country because of the good infrastructure, well educated people speaking their languages, the easy accessibility and the many tax treaties.

Real Estate Management and Corporate Services

Also, foreign investors and investments funds buying and managing (Dutch) real estate move with these structures. Dutch companies, directly or indirectly hold real estate in The Netherlands. The Dutch corporate services office manages the company, is usually statutory director, arranges the financial administration, and takes care of the legal and administrative status (corporate housekeeping) of the company. The real estate is managed by an Asset Manager and a local Property Manager. The Property Manager carries out the administration of the real estate and provides the administration to the corporate services office enabling the corporate services office to prepare the final reports and the statutory annual accounts.

The Panama Papers

Certainly, after the start of the crisis in 2008, there has been much going on about the structures that are served by corporate services offices, in The Netherlands in particular the tax routes. For the general public, the Panama Papers formed the journalistic breakthrough. This resulted in a unique event in Dutch politics, the first parliamentary interrogation in which various parties, like representatives from the Dutch Corporate Services sector, fiscal advisors, the supervisor of the Dutch Central Bank and journalists were interviewed under oath as witnesses and experts.

Serious consequences, nationally and internationally

During this parliamentary interrogation the concept ‘substance of form’ was discussed more than once. Companies that are based in a certain country for tax reasons, should have ‘substance’ in that country. If not, their presence in that country is not recognised. To avoid the appearance of the structure only being a structure providing a financial advantage, the Tax Authorities and the Ministry of Finance prepared a list of 10 requirements that a company has to fulfil in order to be seen as a Dutch company and in order to be able to use the treaties network. A substantial effort in the home country is the basis. Thus, it was a requirement that amongst others half of the management has to be living in The Netherlands, the bookkeeping has to be performed in The Netherlands and de bank accounts are to be managed from The Netherlands.

Internationally, the OECD (Organisation for Economic Cooperation and Development) started the BEPS project (Base Erosion and Profit Shifting), an action plan that has to result in globally coordinated agreements to prevent tax evasion by base erosion and profit shifting. The action plan consists of 15 points of action. Although the BEPS action plan is still in an early state of implementation, it is already clear that it will be a global regime, with increased tax risks for organisations that do not commit themselves to these points. Also in these points ‘substance’ plays an important role.

Propco acquires logistics building in Amsterdam from DHG

19-7, 2017

Equity Estate has further expanded the Propco portfolio by acquiring a logistics building from DHG, located at the Galwin 2 in Amsterdam.

The building, that originates from 2003, has been designed by Timmer architecten and is fully and long-term let to IGT Europe BV. It consists of approximately 8,772 m² of warehouse space, 2,857 m² of office space, some 3,000 m² paved outdoor area with 98 parking spaces. Furthermore, the property is located directly adjacent to the A5 motorway.

After the acquisition of three industrial/logistic buildings, in Dordrecht, Rijnsburg and Beuningen, this is the fourth acquisition for Propco in the past 12 months. The acquisition has been made full equity, and the intention is to continue expanding the portfolio in the coming months, with industrial and logistics buildings with long-term leases on strong locations.

Shamrock Vastgoed advised DHG in the deal. Propco was represented by JLL, and Van Benthem & Keulen acted as a legal advisor. Equity Estate is the asset manager and director of Propco.

AB Alternative Fund acquires "De President" in Hoofddorp

3-7, 2017

Nova Capital has sold the "De President" property in Hoofddorp to AB Alternative Fund SICAV-SIF. Equity Estate is an investor in and the asset manager of the AB Alternative Fund SICAV-SIF. The semi open ended fund consists of 7 buildings in Germany, Luxembourg and The Netherlands.

"De President" property is located at the Jacobus Spijkerdreef 20-24 in Hoofddorp and consist of office, storage and logistic space. The total floor area comprises approximately 9,514 sq.m. with 145 parking spaces. The building is fully let to Scotch & Soda. The acquisition price amounted approximately EUR 8.75 million.

Equity Estate acted as asset manager for the purchaser, performed the complete due diligence and directed the negotiations on LOI and SPA. The due diligence partners on buyer’s side were Holland van Gijzen, SGS Search and Hofstede cs. Seller was advised by Cushman & Wakefield and Retail Capital and represented by CMS as a legal advisor.

HighBrook Investors divests office building in The Hague

12-6, 2017

HighBrook Investors divests an office building on the Laan van Nieuw Oost-Indië 123-127 in The Hague to a Dutch private investor. The total floor area comprises approximately 12,936 sq. m. LFA office space, of which 25% is rented to different tenants. HighBrook Investors acquired the office building in December 2016 as part of an off-market portfolio transaction.

Equity Estate advised HighBrook Investors on this transaction together with the legal advisor Van Doorne . CBRE was responsible for the marketing of the building and represented vendor. Pels Rijcken & Droogleever Fortuijn advised the buyer.

With this divestment, it is the sixth transaction of HighBrook Investors in the past six months. HighBrook Investors is a US-based real estate private equity firm with approximately € 1.0 billion in AUM. The firm has offices in New York, London, Newport Beach and Atlanta. The company is actively seeking additional opportunities to acquire well located office assets primarily in greater Amsterdam area, Rotterdam and Utrecht. (www.highbrookinvestors.com).

Equity Estate Corporate Services appointed by Merkspace to start Dutch activities

29-5, 2017

The successful co-working & private office concept from Tel Aviv Merkspace will be opening a brand new building in the heart of Amsterdam at the Herengracht 499 on July 1st of 2017. Equity Estate Corporate Services is acting as corporate service provider for Merkspace in setting up their activities in the Netherlands.

With the first global Sports-tech Innovation-centre and a big Asian incubator department, Merkspace focuses on start-ups that want to accelerate and that want to profit from their international network and these opportunities. In the last year Merkspace raised 3.7 million dollars for their start-ups, and made more than 9,000 business connections for the 150 companies they now supply. The close lines with the start-up scene in Tel Aviv will give access to the top of the line speakers, tech innovators, experts and not so less important venture capitalists.

One of the most exciting things is that Merkspace actively looks for business opportunities for their tenants, within their own (international) network. Every month there will be a new unique delegation visiting the office for mentoring, lectures and the investors breakfast. That being said, service-providers, freelancers and small-medium businesses that want to benefit from the opportunities Merkspace offers, are more than welcome. Working spaces already starts at € 250 a month.

Equity Estate Corporate Services is focussing on management services (directorship, domiciliation and administration) to real estate companies and operators. With our in-depth knowledge of the real estate industry and market we add substantial value to your company.

HighBrook Investors and Equity Estate Acquire office building ‘Spectrum’ in Amsterdam

8-5, 2017

In an off-market transaction, Credit Suisse Real Estate Fund International has sold the office building ‘Spectrum’ to the combination consisting of HighBrook Investors and Equity Estate.

Spectrum is located at a prominent location in the Sloterdijk/Teleport area in Amsterdam, located at the at the Gatwickstraat 9-39, visible from the motorway A-10.

The total floor area comprises approximately 7,685 sq.m. LFA office space, spread over 9 floors with 109 parking spaces located in the parking garage and at the outside area. The building is fully rented to DPA.

HighBrook Investors and Equity Estate were advised by Van Gool ♦ Elburg Vastgoedspecialisten during this transaction and legally represented by Loyens & Loeff.

In this transaction Credit Suisse REFI was legally represented by Clifford Chance.

Propco expands portfolio with DIY-store in Beuningen

10-4, 2017

For the expansion of the Propco portfolio, Equity Estate has acquired a DIY-store located at the Claudiuslaan 62, in Beuningen. CBRE Global Investors divested the property, after recently having extended the lease agreement. The building comprises nearly 5,500 m² and offers ample parking facilities on site.

Van Neerbos Bouwmarkten recently signed a substantial extension of their lease agreement to ensure a long-lasting continuation of one of their Gamma franchises at this specific location. Van Neerbos Bouwmarkten is the largest franchise holder of Intergamma, owning/operating more than 150 stores in The Netherlands and Belgium, and is part of the stock listed CRH conglomerate, one of the worldwide market leaders in the field of building materials.

After the acquisition of two industrial/logistic buildings in Dordrecht and Rijnsburg in 2016, this is the third acquisition for Propco. The intention is to further expand the portfolio to a size of around EUR 50 million, with long-term leases on strong locations. Van Benthem & Keulen acted as the legal advisor on behalf of Equity Estate, whilst BVVL winkel vastgoed adviseurs acted as the commercial advisor of the seller during the entire process.

HighBrook Investors acquires office building ‘Parktoren’ in Amstelveen

5-4, 2017

TRIUVA Kapitalverwaltungsgesellschaft mbH has sold the ‘Parktoren’ to the combination consisting of HighBrook Investors and Equity Estate.

The office building ‘Parktoren’ is located at a privileged location in Amstelveen, nearby the city of Amstelveen at the Van Heuven Goedhartlaan 7-13 in Amstelveen.

The total floor area comprises approximately 10,000 sq. m. office space, spread over 10 floors with 45 parking spaces located in the parking garage underneath the building. The building is rented to several lessee’s, amongst others the Rabobank, Greif Beheer and Aurora Hotel Development.

In this transaction TRIUVA was advised by Van Gool ♦ Elburg Vastgoedspecialisten, legally CMS Derks Star Busmann was involved and tax advice was given by PwC.

HighBrook Investors was advised by Equity Estate, Loyens & Loeff and SGS Search during this transaction.

Equity Estate divests warehouse building in Enschede, the Netherlands

17-3, 2017

In March 2017, Equity Estate successfully divested the approximately 6,800 sqm warehouse building located at the Strootsweg 16 in Enschede. KLM Kwintet Kleding was the former occupier that terminated its lease in Q2 2016. The building was vacant for some time. Two local investors have acquired the building for a price of EUR 1,725,000. The vendor has been advised by Cushman & Wakefield and Boers & Lem.

Equity Estate appoints Rob de Groot as Director Management Services

6-3, 2017

Equity Estate, specialist in Asset Management and Management Services in real estate, appointed Rob de Groot(49) as Director Management Services. De Groot has build a strong and positive track record in management services at ABN AMRO Trust Company and most recently at TMF Netherlands, where he worked as Team Leader Accounting. Within Equity Estate De Groot is responsible for all management services activities and will take directorship for real estate investors that choose domiciliation in the Netherlands for their property companies. He will report his activities to the board of Equity Estate, formed by Enrico van Erkelens (CEO) and Nard Schuddebeurs (COO).

Enrico van Erkelens, CEO Equity Estate, says about the appointment of De Groot
“Investments in direct real estate in the Netherlands are tremendously popular. For foreign investors and private equity firms a well thought out portfolio and efficient and careful management of the properties are important for optimal efficiency. That requires specific knowledge of the local real estate market and knowledge of financial constructions and tax law to make sure investments correspond with the needs and aspirations of investors. We are fully organised around this service: we have been in real estate for 20 years, have a solid structure for controlling and reporting, are in possession of the Dutch Supervision of Trust Offices Act license (Wtt) and are supervised by the Dutch Central Bank. Rob’s strong track record in the field of accounting, company management and fiduciary management, in combination with our thorough knowledge of the real estate market offers us the opportunity to expand our management services activities to clients of which we are not the asset management partner.”

Background Rob de Groot
De Groot has an accounting background and did various studies in the field of international tax law and a Master Trust Officer course. From 1987 to 2005, he worked in various positions at ABN AMRO, including 10 years as Senior Client Relationship Manager at ABN AMRO Trust Company (Netherlands) BV. Over the past 10 years De Groot worked for TMF Netherlands BV where he was responsible for the Accounting Team (about 300 companies), setting up the VAT compliance department and the Banking Team. In addition, he was personally active as statutory director at Dutch entities of international organisations in the banking industry, telecommunications and real estate.