Commercial Real Estate Finance Council Europe

EU Legislative Interests

We are interested in initiatives relating to the promotion of investment in the real economy, the financing of infrastructure (specifically commercial real estate, including commercially owned and operated rental housing) and the built environment, and long-term investment. We are particularly interested in elements of the Capital Markets Union, such as the revival of the securitisation market for exposures such as commercial mortgage-backed securities (CMBS) which have unfortunately been classified as irredeemably "non-STS" and therefore give rise to penal capital charges under the Solvency II SCR. Other financial sector regulation affecting commercial real estate lending, such as regulation of banks (e.g. via CRR implementing Basel III finalisation), insurers (the Solvency II SCR point mentioned above), and alternative investment fund managers investing in commercial real estate debt or advancing commercial real estate loans. We are interested in proposals relating to the regulation and oversight of non-bank financial intermediaries (NBFIs), an important source of credit for real estate markets to the extent that banks reduce their participation. We are interested in real estate and financial market data and transparency, including through efforts (such as by the ESRB) to define, understand, monitor and manage financial system risks arising from the commercial real estate (debt) market. We are increasingly focused on how commercial real estate finance markets can reflect and promote environmental, social and governance (ESG) considerations, including through 'green' lending to encourage the decarbonisation of the built environment, as well as improving the diversity and inclusiveness of our industry. Related data sharing and disclosures, SFDR, EU Taxonomy and similar initiatives are therefore of interest. We participated in the EEFIG working group on Energy Efficiency First in this context. A growing representation of passive debt investors and real estate investment firms in our membership is broadening and driving our agenda to ensure that the commercial real estate lending industry remains connected to the concerns of those two critical external stakeholder groups. (In other words, not only do we not represent any particular constituency of lenders at the expense of others; we do not represent lenders at the expense of their borrowers or those allocating capital to the lenders. We are focused on the market as a whole.)

Communication Activities

Promoting greater transparency and liquidity in commercial real estate debt markets. Promoting strategic, holistic and informed through-the-cycle regulation of commercial real estate lending markets. In particular, promoting the recommendations of the Real Estate Finance Group, an independent real estate industry group in the UK, as set out in its May 2014 report, "A Vision for Real Estate Finance in the UK". These remain of relevance today (with some updates), and beyond the UK. Collaborating with other industry organisations, including through the UK Property Industry Alliance and the European Real Estate Forum on the real estate side and with organisations including AFME, AIMA/ACC and the LMA on the finance side, for mutual information exchange and coordination where appropriate. This collaboration can also help to improve understanding of the role of commercial real estate investment (equity and debt) in the European economy (including in socioeconomic terms), in relation to financial stability and from the point of view of investors. Generally, helping policymakers and financial regulators better understand commercial real estate finance markets, trends, drivers and risks. More broadly, ensuring that commercial real estate finance supports both the needs of passive debt investors who allocate capital to it, and the needs of the real estate firms that connect it to the real economy. We are interested in how the market will respond to a changing macroeconomic environment, with inflation affecting construction costs and interest rates affecting the cost of existing debt and its refinancing. We are keen to promote and enhance the role that banks and other lenders can play in financing decarbonisation in the built environment, and are very interested in the persistent mismatch (of which most policymakers seem oblivious) between mainstream policymaking for decarbonisation, on the one hand, and the incentives arising out of financial regulatory measures, on the other. We promote our priorities through the networking, informational and educational opportunities afforded by conferences, seminars and our young professionals network, and by organising industry initiatives involving forums and working groups targeting particular issues, products and parts of the market. We do not have the resources for a lobbying operation in Brussels (or anywhere else for that matter), so as far as policymakers are concerned our activities relevantly take the form mainly of responding to public consultations. Occasionally we have bilateral or multilateral engagement with policymakers outside the parameters of such consultations. We welcome opportunities to engage directly and informally with policymakers who recognise that they might benefit from insights that we can offer.

Interests Represented

Promotes their own interests or the collective interests of their members

Member Of

We are a member of the European Real Estate Forum (https://www.europeanrealestateforum.eu) and of the UK Property Industry Alliance (https://propertyindustryalliance.org) and Green Property Alliance (https://propertyindustryalliance.org/green-property-alliance/), and sometimes collaborate with other associations whose interests and memberships overlap with our own on bilateral or multilateral bases. We are a sister organisation of the CRE Finance Council (https://www.crefc.org/, which has a broadly similar remit to our own, but in relation to the USA).

Organisation Members

https://www.crefceurope.org/pages/member-directory