At the request of the investor community, the NCREIF PREA Reporting Standards Council in collaboration with the NCREIF Accounting Committee developed a Guide for Disclosures of COVID-19 Related Rent Relief. Use of the Guide fosters transparency around the financial impact of the unprecedented number of rent deferrals and waivers granted to tenants resulting from the COVID-19 pandemic. There are a variety of solutions for providing relief and accordingly, there is no one size fits all solution for how revenue is recognized and reported within financial statements. The Guide provides investment managers with a consistent framework to report this impact to investors, synthesized in a meaningful manner, inclusive of information they are likely planning to discuss and disclose, using data that is generally available. The Guide is designed to promote understanding, ease of information access, and uniform transparency, while also addressing the unique levels of disclosure associated with a particular fund or separately managed account (SMA).

“The Guidance issued by NCREIF PREA Reporting Standards and the NCREIF Accounting Committee is very useful to investors like NYSTRS in collecting information to assess and report on the impact of rent deferrals and waivers in their portfolios. In responding to demands for real time information, we appreciate the transparent and consistent reporting guidance being provided to the investment managers, and will request our managers voluntarily comply with these recommended best practices.”

Michael Morrell, Manager – Global Real Estate Investments, NYSTRS

NCREIF members have access to the monthly Rent Analysis Report which summarizes the rent collection rates of the 4 major property types: office, retail, apartment and industrial as reported within the NCREIF Open-end Equity Index. The Guide includes the metrics included in the NCREIF Rent Analysis Report as well as other information important for understanding of the impact of rent relief on the fund or SMA. The Guide is intended for use by open-end, closed-end, SMA’s etc. with operating properties.

Issued in time for June 30, 2020 reporting, the Guide can be used as long as the investment manager and investor deem it is meaningful, with early adoption encouraged. This is recommended reporting guidance that can be used as situations warrant but is not required reporting in order to claim compliance with the NCREIF PREA Reporting Standards.

 Highlights include:  

  • Income recognition policy that management has elected for deferred rents and reserves for collectability.
  • Impact of deferred rents, waived rents and reserves for collectability on net income reported in the financial statements.
  • Summary of collectability of deferred rents by property type and management’s policy for monitoring the collectability of the deferred rents.

The Guide is available on the Reporting Standards website. Questions or comments can be sent to Marybeth Kronenwetter, Director, Reporting Standards (marybeth@reportingstandards.info).