Valuation Exposure Draft: Proposed changes to valuation requirements relating to policy and internal valuations for all funds and external valuation requirements for closed-end funds and single client accounts

Comments due by October 4, 2019

The NCREIF PREA Reporting Standards Board and Council invite all interested parties to comment on the exposure draft: Proposed changes to valuation requirements relating to policy and internal valuations for all funds and external valuation requirements for closed-end funds and single client accounts. A summary of the change and associated reason for the proposed changes are as follows:

  • To increase relevance and applicability of the Reporting Standards by closed-end funds and maintain existing integrity and quality of the Reporting Standards by:
    • Removing the requirement for annual external appraisals
    • Affirming the existing requirement for fair value audits for all funds.
  • To increase transparency surrounding valuation policy within close-end funds and single client accounts by: requiring specific disclosure of the use of external valuation policies in offering materials.
  • To foster increased transparency surrounding quarterly valuations which are required by: by adding rigor to internal valuation processes.
  • To acknowledge regular and active trading of open-end funds by: maintaining the requirement for annual external appraisals for open-end funds.
  • To maintain alignment with the recently released 2020 Global Investment Performance Standards (GIPS®)

The current strategy aims to expand the adoption of the Reporting Standards by improving the transparency and consistency of reporting across all funds, particularly closed-end funds. This effort, along with others nearing completion (including: the new Total Global Expense Ratio (TGER); enhanced disclosures surrounding gross net IRR) are expected to culminate in the reissuance of the Reporting Standards for 2020. With industry comment and the support of our sponsors, NCREIF and PREA, the Board and Council continues its mission to establish, manage and promote reporting standards for the industry to facilitate informed investment decision making.

The comment period for the above referenced exposure draft concludes on October 4, 2019.