ANREV, INREV, NCREIF and PREA are pleased to jointly release for industry consultation the first globally comparable measure of fees and costs named Total Global Expense Ratio (TGER).

The new proposed global standard measures the fees and costs related to participation in a real estate investment vehicle and enables comparison across products, regardless of the vehicle domicile, structure and management activities.

The Total Global Expense Ratio incorporates definitions from the Global Definitions Database, bringing consistent terminology for the most widely used vehicle fees and costs that may be charged directly and indirectly by investment managers and service providers.

The consultation process for TGER runs until 21 June to provide the industry with the opportunity to help design a global standard that is simple, practical and facilitates comparison and consistent reporting of fees and costs.

TGER and the GDD are initiatives of the Global Standards Steering Committee, established as a collaboration between INREV, ANREV, NCREIF and PREA to jointly develop comparable reporting standards for institutional real estate investment vehicles on a global basis.

For further information please contact:

Amelie Delaunay, ANREV

Constantin Sorlescu, INREV

Marybeth Kronenwetter, NCREIF PREA Reporting Standards

PwC and ANREV are delighted to publish the results of our real estate fund managers’ benchmarking survey, which was designed to gather, analyse, and share information about key industry operational trends and metrics of real estate fund managers with significant operations in Asia Pacific. We gathered data covering industry practices relating to organisational information, governance, risk management, administration,valuation, technology and operations, regulatory information and reporting. This report represents the summary of the data and includes key takeaways, by section, to assist you with your review.

Given the data is collected from various fund managers with different business models and structures, the same operational arrangement does not apply to all the fund managers. Naturally the scale of investment mandates, the number, location and diversity of investments, reporting and governance needs of investors, together with the institutionalisation of the wider business, are factors which will impact the operational structures needing to be put in place. Thus, we have explored how the practices may vary depending on the geographical locations and the size of the managers.

PwC conducted this survey to explore trends that would help real estate fund executives and management teams benchmark their practices against their industry peers. We have extracted some key takeaways on the next page. We hope that you find our results and analysis helpful.

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Valuation of real estate assets is one of the most critical parts within the calculation of a real estate fund’s net asset value (“NAV”). In addition to determining the fair value of the underlying real estate asset(s), fund managers and investors have to take into account other actual or contingent assets and liabilities such as deferred taxation and minority interests in determining NAV at the fund level.

In April, ANREV hosted a round table where a number of investors, managers and advisors explored current market practices around the valuation of real estate assets and NAV determination for the holding funds, including geographical, market practice, accounting adjustments and governance.

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ANREV Professional Standards Committee would like to thank the participants who have engaged in the discussion as well as Paul Walters and Michael Atkinson from PwC, who kindly helped to facilitate the discussion and wrote this paper.

To learn more about this Committee, please click here.

Within the Asia Pacific real estate industry the last few years has seen a steady supply of newly launched open end real estate funds, aimed at keeping up with constantly evolving investor demands, and at the same time highlighting the improved maturity of the market and the need for stable returns.

Whilst many fund managers in the region are launching or considering launching these funds, there are considerable structural and operational challenges which need to be navigated, such as valuation, liquidity terms, choice of structure and domicile for effective tax and distribution, fees and use of leverage to name a few.

In response to many questions being raised on these vehicles, PwC and ANREV hosted a round table where ANREV members from a number of fund managers across four locations (Hong Kong, Singapore, Sydney and Shanghai) discussed the opportunities and challenges of managing Asia Pacific open end real estate funds.

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ANREV Professional Standards Committee would like to thank the funds’ managers who have participated in the discussion as well as Paul Walters and Michael Atkinson from PwC, who kindly helped to facilitate the discussion and wrote this paper.

To learn more about this Committee, please click here.

 
This is the fourth annual Review of Investor Reporting Trends published undertaken by PwC for ANREV.
 

The compliance in 2016 continue to improve to reach 70.3%, an increase of 260 basis points from the 2015 review.

Whilst much of our discussions this year have centred on the new INREV Sustainability Reporting requirements, we have not included specific compliance with those guidelines due to their release after the 2015 reporting cycle.

We would expect to see further improvements in the years ahead, especially by newly launched vehicles in light of heightened investor expectations generally being experienced.

We would like to extend our sincere thanks to all who shared their valuable time and expertise during this project. 

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According to the 2016 ANREV/INREV/PREA Investment Intentions Survey, investors show a strong intention to increase their allocation to joint venture and club deals. This trend has been observed for the past few years;  clubs and JVs are sometimes seen as an alternative to non-listed real estate fund investment.

In April 2016, ANREV Professional Standards Committee hosted a round table where a number of investors and managers discussed the pros and cons of JVs, including issues of governance, reporting and structuring. The Committee would like to thank the investors and the funds managers who have participated in the discussion as well as Mark Cooper from Asia Property who kindly helped to facilitate the discussion and wrote this paper.

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With the participation of many of their volunteer members, ANREV, INREV, NCREIF and PREA are pleased to present the Fee and Expense Metrics – Phase I Results – the first joint publication towards global reporting standards. These Phase I Results bridges gaps in terminology and associated definitions of the most common fees and costs.

Investors can use this report guidance to enhance their understanding of fees (between investment managers and their investors) and costs (charged to a fund by external service providers). These include the Total Expense Ratio (TER) and the Real Estate Expense Ratio (REER) contained in the INREV Guidelines and the Real Estate Fees and Expenses Ratio (REFER) contained in the NCREIF PREA Reporting Standards. In 2017 we expect to build on this product as we complete the development of a globally consistent set of measures of fees and costs; thereby equipping investors with the tools needed to compare costs across regions.

The Global Standards Steering Committee (SSC) has other projects progressing including a converged glossary of terms and also reporting asset management information similar to that provided within INREV’s Standard Data Delivery Sheet. They have also begun discussing Net Asset Value (NAV).

Please contact Amélie Delaunay for further information.

We are pleased to present the first product of our Global Standards Steering Committee, and to update members on three global projects.

The NCREIF PREA Reporting Standards and INREV Guidelines: Broad Comparison 2015, highlights the most important differences between the INREV Guidelines that we endorse in Asia Pacific and the NCREIF PREA Reporting Standards and proposes steps to bring them into closer alignment. The report is based on a study prepared by Deloitte NL and focuses on five areas of convergence: definitions, fees and expense ratios, reporting, valuation, and NAV and fair value accounting. Two projects are currently underway to take the next step towards global reporting standards in these areas of convergence.

The Global Definitions Project strives to develop a common glossary of terms – an essential component of any converged standard.  A taskforce has been assembled and milestones are being established. This project will be on-going throughout the conversion process.

The Fee and Expense Project is converging the NCREIF PREA Reporting Standards Real Estate Fees and Expenses Ratio (REFER) with the INREV Total Expense Ratio (TER) to create a single global standard – a critical component to understand manager performance for a fund or vehicle. A taskforce has been assembled and has commenced work.  We anticipate substantial completion of the Fee and Expense Project for use in the Management Fees Term Study: A Global Comparison Study that will be published by ANREV, INREV and PREA in 2016

The Reporting Project will harmonise qualitative and related quantitative reporting elements globally.  We are currently seeking volunteers to form the third project.

The Global Standards Steering Committee was established in early 2015 as a collaboration between ANREV, INREV, NCREIF and PREA to jointly develop a global set of information reporting and disclosure standards, on a non-exclusive basis, which apply and are relevant to the private/non-listed real estate vehicle industry in order to support efficiency and best practice as well as the flow of capital in this industry sector. For further information about any of our projects or if you are interested in participating, please contact Amelie Delaunay, ANREV Director of Research and Professional Standards.

This is the third annual review of best practice reporting published between PwC and ANREV.

As anticipated last year, compliance levels are growing back towards the levels established with the “old” Guidelines, with headline compliance moving up from 57% last year to 68% this year.

Key highlights of the review this year:

• Work in progress to comply with revised INREV Guidelines as managers are keen to achieve a high level of compliance
•  Investments in technology with the use of online investor reporting portals
• Fund managers are putting more importance and effort in ESG reporting

As part of the 2015 review, private feedback, through interviews and calls, were organised with the 28 participating fund managers, covering all 47 respondent funds.

We would like to extend our sincere thanks to all who shared their valuable time and expertise during this project. 

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Earlier this year INREV, ANREV, NCREIF and PREA officially signed an agreement to create global standards.

To support and advise on the creation of these standards a global steering committee of industry experts has been set up with representation from Asia Pacific, Europe and North America.

A comparison of the NCREIF PREA Reporting Standards and the INREV Guidelines was jointly commissioned by Deloitte, NL and a preliminary report of its conclusions was presented during the first meeting of the Standards Steering Committee on June 18.  The Committee’s initial priorities will be the development of consistent definitions and the reconciliation of INREV’s Total Expense Ratio with the NCREIF PREA Reporting Standards Real Estate Fees and Expenses Ratio.

We are delighted to announce that the following senior industry experts have agreed to participate:

For further information please contact Amelie Delaunay, ANREV. Maurits Cammeraat, INREV or Marybeth Kronenwetter, NCREIF PREA Reporting Standards.