* Europe property faces cash call on interest rate swaps
* Collateral on swaps would be between 55-100 bln eur-BPF
* EU should exclude property sector from new regulation-BPF
By Karen Foster
LONDON, Jan 14 (Reuters) - Europe's property sector is lobbying regulators not to tighten the rules on interest rate swaps as it faces a possible 100 billion euro ($130.5 billion) hit from being lumped together with risk-hungry speculators.
The proposed European Market Infrastructure Regulation (EMIR) could devastate property companies, which would need to put up collateral when taking out an interest rate swap to secure a fixed rate for a loan, they say.
"The ... sector must now engage with this issue and lobby for an exemption ... or face having to fully collateralize their interest rate swaps," Bill Bartram from risk advisers J.C. Rathbone Associates said at a panel discussion.
The rules, currently in the European parliament, would force financial counterparties such as banks and hedge funds to clear interest rate swaps through an external clearing house and not via private negotiation.
But it will also hit real estate investment trusts (REITS) -- that get tax benefits from distributing most of their profits in dividends -- who are required to hedge risk with a swap when getting a loan.
EXPLICIT EXEMPTION
Clearing houses require counterparties to put up collateral, which could be too expensive for the real estate companies, which under the proposed rules also include funds holding real estate directly, and some private companies.
Peter Cosmetatos, finance director at the British Property Federation (BPF) which represents companies including Land Securities, Hammerson and British Land, said he thought the UK government shared the property industry's worries about EMIR, which would be alleviated if the regulation explicitly exempted real estate funds and pre-existing contracts.
"I think it would be ironic and disastrous if measures that are intended to improve market stability caused serious market instability by imposing a cash requirement on businesses that have just about managed to cope," he said.
The property industry would be hit by an estimated 65 billion euro cash call for collateral on interest rate swaps if the plans do not change, interest rate and currency risk adviser Chatham Financial said in a report in November.
BPF's Cosmetatos said it was difficult to be precise about how big the interest rate swap market for property was, but the figures that different people had produced suggested a range of between 55 billion euros and 100 billion.
"No one has transparency on the market and how many derivatives are out there and what their market value is," Cosmetatos said. "But we know that the numbers would be very large.
Rebecca Worthington, finance director of Quintain Estates and Development, said concerns about the regulation were already affecting people's decisions.
"We don't know what the effects are for the property market and given that we don't know, we're having to actually take cognisance of what could happen in making commercial decisions today (about something) that actually may never happen," she said. (Editing by David Holmes) ($1=.7665 Eur)