Luxembourg MASTER FUND SICAV-RAIF Launch for European Real Estate Investments

The European real estate market continues to attract institutional investors, family offices, pension funds, private equity firms, and ultra-high-net-worth entrepreneurs seeking yield, diversification, and long-term capital preservation. Among Luxembourg structures, the MASTER FUND SICAV-RAIF has rapidly become one of the most efficient and scalable vehicles for pan-European real estate strategies. Its flexible architecture, AIFMD framework, and tax-efficient setup allow sponsors to deploy capital across offices, residential assets, logistics platforms, hospitality, data centers, and alternative real assets.

This guide explains how a MASTER FUND SICAV-RAIF works, why Luxembourg is the preferred jurisdiction, how to structure master–feeder strategies, and what investors should consider when using this vehicle for European real estate investments.

What Is a MASTER FUND SICAV-RAIF?

This section gives a clear definition of the structure before you look at strategies or tax aspects.

A MASTER FUND SICAV-RAIF is a Reserved Alternative Investment Fund (RAIF) set up in the legal form of a SICAV (Société d’Investissement à Capital Variable). RAIFs operate under the AIFMD framework, require an external AIFM, and benefit from a fast time-to-market, because they are not subject to CSSF pre-approval. The MASTER FUND structure sits at the top of a platform that may include multiple compartments and feeder funds.

As a master vehicle, the SICAV-RAIF centralises portfolio construction and risk management, while feeder funds or compartments give access to different investor profiles, geographies, or risk-return strategies. This approach is particularly attractive for sponsors running several real estate strategies in parallel across Europe.

Why the SICAV-RAIF Structure Excels for European Real Estate

Here we focus on the main reasons this vehicle is preferred by sophisticated real estate investors.

1. Rapid Deployment of Capital

In a cyclical market, the ability to move quickly is a competitive advantage. Because a RAIF does not need CSSF prior authorisation, the time between concept and first closing can be reduced by several months. Once the AIFM, depositary, and documentation are in place, a MASTER FUND SICAV-RAIF can often go live within 30 to 40 days, allowing sponsors to capture pipeline opportunities before pricing shifts.

2. Professional Investor-Focused Framework

The RAIF regime is designed for:

• Institutional investors
• Family offices and ultra-high-net-worth individuals
• Private equity and real estate funds
• Pension funds and insurance companies
• Sovereign wealth funds

The typical minimum subscription is EUR 125,000, which aligns with the well-informed investor test. This ensures the investor base understands the risks of private real estate strategies, leverage, and long holding periods.

3. Tax-Neutral and Cross-Border Friendly

Luxembourg RAIFs are often used to achieve tax neutrality at the fund level, subject to proper structuring. A SICAV-RAIF can:

• Benefit from flexible tax treatment depending on its setup
• Use local SPVs to invest in real estate across the EU and beyond
• Avoid economic double taxation where appropriate
• Distribute returns without Luxembourg withholding tax in many cases

For multi-country portfolios, this neutral “conduit” role is essential when aligning the interests of sponsors, co-investors, and institutional LPs.

4. AIFMD Passporting Across Europe

Because the MASTER FUND SICAV-RAIF is managed by an authorised AIFM, it can benefit from the AIFMD marketing passport. The AIFM can notify regulators and market the fund to professional investors across the EU and EEA, harmonising fundraising efforts and reducing duplication of structures.

How MASTER FUND SICAV-RAIFs Operate in Real Estate

This part describes the operational architecture used to deploy capital into real estate assets.

Master–Feeder Architecture

A common setup is:

• Master compartment: Holds the consolidated real estate portfolio.
• Feeder compartments: Tailored to specific investors or risk profiles, such as core, value-add, opportunistic, or credit strategies.

This architecture allows the sponsor to launch new compartments as new strategies or investor groups arise without replicating the entire governance and service provider stack.

SPV-Based Acquisitions

Because real estate transactions are governed by national laws, the MASTER FUND SICAV-RAIF typically invests via local SPVs in countries such as:

• Luxembourg
• Germany
• France
• Spain
• Netherlands
• Italy
• Nordic markets
• Central and Eastern European countries

Each SPV holds one or several properties, allowing ring-fencing of liabilities and structuring of debt at the asset level.

AIFM Oversight

The appointed Alternative Investment Fund Manager is responsible for:

• Portfolio and risk management
• Compliance and reporting under AIFMD
• Approval of valuation policies
• Monitoring leverage, liquidity, and concentration risk
• Controlling marketing notifications and passporting

Investment Strategies and Expected Returns

Next, we look at the main types of strategies and the return ranges they usually target.

Core and Core-Plus Real Estate

Core and core-plus strategies target stabilised, income-producing assets with strong tenants and long leases. In Europe, these strategies may aim for 3.5% to 5% annual yields and modest capital appreciation, appealing to insurers and pension funds.

Value-Add and Opportunistic

Value-add strategies focus on repositioning, lease-up, ESG upgrades, or operational improvements. Opportunistic strategies may include developments, special situations, or distressed acquisitions. These strategies may target 8% to above 15% IRR, but require more active management and carry higher risk.

Real Estate Credit and Hybrid Strategies

Some MASTER FUND SICAV-RAIFs specialise in real estate debt (senior loans, mezzanine, preferred equity) or hybrid equity-debt structures. Typical return targets can range from 6% to 9% per year depending on position in the capital stack, security, and jurisdiction.

Governance, Risk Management, and Compliance

Good governance is a core reason institutional investors are comfortable with this vehicle.

AIFM Responsibilities

The AIFM plays a central role in investor protection. Key responsibilities include:

• Monitoring investment compliance with the Offering Memorandum
• Defining and applying risk management frameworks
• Controlling leverage and liquidity metrics
• Overseeing valuation methodologies and NAV calculations
• Ensuring AML and KYC policies are applied to all investors

Depositary Bank and Auditor

The depositary bank is in charge of safekeeping assets, monitoring cash flows, and performing oversight on certain fund operations. An independent auditor reviews the financial statements, often prepared under Luxembourg GAAP or IFRS, and provides an annual audit opinion to investors.

Who Should Use a MASTER FUND SICAV-RAIF?

Here we outline which investor profiles typically benefit from this fund structure.

A MASTER FUND SICAV-RAIF is particularly suited to:

• Real estate promoters scaling across multiple EU jurisdictions
• Private equity real estate firms consolidating several strategies
• Family offices looking for a professional yet flexible platform
• Institutional investors building a pan-European real estate allocation
• Entrepreneurs professionalising their real estate holdings

The combination of tax efficiency, AIFMD passporting, professional governance, and compartment flexibility explains why this structure is at the core of many European real estate platforms.

Key Features and Benefits

Damalion highlights the main advantages in a concise, scannable format.

• Fast launch thanks to the RAIF regime with no CSSF pre-approval
• AIFMD passporting for European professional investors
• SICAV umbrella with multiple real estate compartments
• Tax-neutral platform for cross-border portfolios, subject to structuring
• Compatible with core, value-add, opportunistic, and credit strategies
• Suitable for institutional investors, family offices, and private equity sponsors
• Flexible master–feeder architecture with dedicated share classes
• Robust governance under an external AIFM, depositary, and auditor
• Scalable from hundreds of millions to several billions of euros AUM
• ESG and sustainability strategies can be embedded in asset selection and business plans

How to Set Up a MASTER FUND SICAV-RAIF for European Real Estate Investments

The steps below walk you through the typical setup process from idea to fully operational fund.

1. Define the investment strategy. Decide whether the fund will focus on core, value-add, opportunistic, or real estate credit strategies across Europe.
2. Select an AIFM. Choose an authorised AIFM with experience in European real estate, risk management, and cross-border distribution.
3. Choose the umbrella structure and compartments. Decide how many compartments you need and whether you will use a master–feeder setup or thematic compartments.
4. Prepare the Offering Memorandum. Draft the fund documentation covering strategy, risk factors, governance, fees, ESG policy, and liquidity terms.
5. Select the depositary bank and auditor. Appoint a depositary bank for safekeeping and oversight and an auditor for annual financial statements.
6. Incorporate the SICAV-RAIF. Execute the notarial deed, register the fund in Luxembourg, and ensure proper corporate documentation.
7. Establish SPVs for acquisitions. Set up Luxembourg or local SPVs aligned with the target countries and financing structures.
8. Organise fundraising and marketing. Use the AIFMD passport to market the fund to professional investors in selected EU and EEA jurisdictions.
9. Deploy capital into European real estate assets. Source deals, perform due diligence, negotiate financing, and execute acquisitions via the SPVs.
10. Ensure ongoing reporting and governance. Produce regular reports, calculate NAV, monitor risks, and update investors throughout the life of the fund.

Please contact your Damalion expert to launch your Luxembourg master fund SICAV-RAIF for your European real estate investments now.

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