ESG Key Performance Indicators – Feedback Requested

Attached are the Reporting Standards ESG Key Performance Indicators (KPIs) document. For ease of use, the KPIs are organized in the same way as the Principles document. Both provide transparent and consistent private real estate best practices related to ESG reporting to incorporate ESG as part of global investment operations.

The KPIs are categorized by “industry best practice”, recommendation and optional reporting and are designed for scalability as we are sensitive to the notion that investors and investment managers may be at varying points on their ESG journey.

The KPIs are referenced to various standards, principles and initiatives related to ESG reporting for real estate. We do not intend to contradict any of the work done by these groups. In addition, compliance with the Principles or incorporation of these KPIs does not indicate compliance with any other initiative referenced in the document.

The Reporting Standards Board, Council and Think Tank are requesting feedback on the KPIs before they are approved and published. They plan to discuss this document at next week’s NCREIF conference in Phoenix, and the goal is to ensure that as many people as possible are given the opportunity to provide feedback. All comments are welcome. They are particularly interested in feedback related to clarity, completeness, classification, and prioritization. Comments are due by April 8^th and can be sent to Jamie Kingsley at administrator@reportingstandards.info.

Tackling ESG: Scalable and Concise reporting principles to navigate information overload

By Laura Craft, Global Head of ESG Strategy, Heitman

Are you an investor trying to make sense of the volume of ESG including DEI information you receive from some advisors and the lack of ESG information received from others? Or, are you an investment manager investing in a world where ESG matters are front and center, and you know you should be addressing the topic but are not sure what is too much vs. not enough for your organization, products or strategy?

Source: NCREIF Performance Report 4q2021

Reporting Standards Announces Release of the ESG Principles of Reporting for Private Real Estate

Throughout 2021, the NCREIF PREA Reporting Standards volunteers, including investors, investment managers, consultants, and various industry experts, have been working towards the development of ESG reporting guidance for private real estate. The mission of this initiative is to facilitate the establishment, management, and promotion of transparent and consistent reporting best practices in order to incorporate ESG as part of global investment decision-making. More information can be found within the project prospectus available on the Reporting Standards website.

After obtaining feedback from standing NCREIF and PREA committees and approval from the Reporting Standards Board, the Reporting Standards is pleased to announce the release of the ESG Principles of Reporting for Private Real Estate.

These Principles should be considered best practices surrounding reporting of ESG for private real estate and are not meant to be prescriptive on how they are used and implemented nor are they required for compliance with the Reporting Standards. Implementing a new reporting framework is a challenging task. We encourage you to use the members of this initiative as a resource as several have created ESG reporting frameworks within their respective organizations in the past. Members are listed within the project prospectus.Furthermore, we encourage investors to use these Principles as a starting point to engage with key stakeholders on the topic of ESG.

In the coming months, the members of this project will work on the development of an accompanying excel template which will include examples of ESG (including DEI) key performance indicators (“KPIs”) that can be used alongside these Principles. Furthermore, it is envisioned that additional materials (e.g., an ESG Best Practices Manual) to facilitate implementation of the Principles will be developed. We view this initiative as an ongoing mission, and as ESG continues to evolve over time, we will monitor and expand our ESG coverage to include new and updated resources as they become available.

For any comments or questions on the Principles or if you are interested in joining this initiative, please contact Marybeth Kronenwetter, Director, Reporting Standards.

Adding Transparency to AUM Reporting

By Greg MacKinnon, Director of Research at PREA

Greg MacKinnon, PREA’s Director of Research, recently spoke with Barbara Flusk and Andrew Muscat to discuss recent developments with the global assets under management (AUM) project. Barbara is Head of Real Assets Fund Services, Citco Fund Services (USA) Inc., and is a NCREIF PREA Reporting Standards representative to the global Standards Steering Committee (SSC). Andrew is Global Head of Investor Accounting and Finance at LaSalle Investment Management and is an INREV representative to the SSC. Andrew and Barbara previously worked together on the task force that developed the Total Global Expense Ratio (TGER).

Source: PREA Quarterly Summer 2021

Global AUM Calculation Tool

Introducing: The Global AUM Calculation Tool

To further transparency and assist with the development of disclosures surrounding Assets Under Management, (AUM), the Global Standards Steering Committee (GSSC) developed the Global AUM Calculation Tool. This excel-based tool stipulates the main components of AUM and includes drop down menus to specify how each of the main components is reported within the calculation. For example, with respect to unfunded commitments, the drop-down menu allows selection of either: included; not included; only included if fees are charged on said undrawn commitments; only included if legally/contractually committed towards and investment; or only included if contractually committed or earmarked to an investment. Once completed, the resulting amount of AUM can be reported with accompanying disclosures as deemed appropriate by the preparer.

The Global AUM Calculation Tool was created following the publication of the ‘Assets Under Management 2021’ paper which aimed to provide a clear overview of the main components considered by investment managers when calculating AUM. Depending on industry appetite to further narrow the number of divergent practices surrounding global AUM reporting, the GSSC will consider developing industry best practice calculation(s).

We welcome all feedback!

Evolution of the NCREIF PREA Reporting Standards

By John Baczewski, Real Estate Fiduciary Services

This is a story of forging new ground. Constant evolution of the real estate markets, the capital markets, and technology; and the importance of responsive, dynamic, and interdisciplinary perspective embedded in the Reporting Standards initiative. Consistent, transparent, and comparable data and information provided within the Reporting Standards plays an ever-increasing role across our industry today as we move rapidly in pursuit of the best information for decision-making. That wasn’t always the case. Evolution requires pioneers. Many pioneering organizations became more institutional as markets evolved and transparency took hold.

Source: NCREIF Performance Report 1q2021

Finding Reporting best practices at the asset level

The NCREIF PREA Reporting Standards initiative was launched in 1993 for the purpose of providing consistent reporting of information within the NPI. Since then, the Reporting Standards have created a global database of definitions, agreed how to report fee and expenses worldwide, streamlined methodologies and much more while remaining true to the mission of comparability and transparency within reported information. The impact hasn’t just been felt in the back offices of real estate investment management firms — but by transaction, portfolio and asset managers and institutional investors alike.

Standardization may feel like a somewhat dull topic, but it’s critical to understanding exposures and therefore risk.

The Reporting Standards is now expanding its work to look at asset and investment-level performance and attribution reporting. John Caruso, Marybeth Kronenwetter and Joseph Nahas, Jr. speak with NAREIM about the Reporting Standards’ new task force to create best practices around asset-level reporting, where some low-hanging fruit potentially lies and what the benefit to investors and managers will be.

Source: NAREIM Dialogues Spring 2021

AUM Global Standards Paper Release

Within the non-listed real estate industry, the definitions, calculations and uses of ‘Assets Under Management’ (AUM) vary significantly. As such the NCREIF PREA Reporting Standards, ANREV and INREV, together with the Global Standards Steering Committee (SSC) have conducted a high level research to assess the current definition and use of AUM including calculation methods. The research results provide a clear overview of each component considered by investment managers used to calculate AUM and reflects the main differences in approach.

As a next step, the SSC intend to release a disclosure tool to facilitate reporting of the main AUM components. Updates will be provided to the members as they become available.

Download Global Standards AUM Paper

Reporting Standards 2021 Board of Directors

NCREIF and PREA, the sponsors of the Reporting Standards are pleased to announce the Reporting Standards Board of Directors for 2021. Members are:

Jim Allen, Managing Director and Fund CFO, Starwood Capital Group
Tony Breault, Senior Real Estate Investment Officer, Oregon State Treasury
Michael Fogliano, Senior Portfolio Manager, Real Estate, State Board of Administration of Florida
Cristiano Machado, CFO Real Estate Funds, Brookfield Property Group
Paul Quinlan, Managing Director and CFO, Real Estate, Blackstone
Jim Strezewski, CFO, Blue Vista Capital Management
Allison Yager, Partner, Global Leader-Real Estate, Mercer

In addition, NCREIF PREA Reporting Standards Board announced that Paul Quinlan, Chief Financial Officer of Blackstone Real Estate, has been appointed Chair of the Reporting Standards Board. Mr. Quinlan previously served as Vice Chair of the Reporting Standards Board and replaces Cristiano Machado, Chief Financial Officer of Brookfield Real Estate Funds, who served as Chair since January 2019 and will continue as a Board Member. The Reporting Standards were established over 25 years ago to establish transparent and consistent reporting standards for the Real Estate industry to facilitate informed investment decision making.

John Caruso, Global Head of Fund Finance for Nuveen Real Estate and Chair of the Reporting Standards Council, said “I welcome Paul’s appointment as Chair on behalf of our entire Reporting Standards community. During his time on the Board, Paul has demonstrated leadership and collaboration with his colleagues across the Real Estate investment community – including institutional investors, investment managers and professional services firms – to help drive our strategy and execution. I’d also like to thank Cristiano for his service as Chair and we look forward to continuing to work together with both him and Paul.”

Paul Quinlan said “I am excited to take on this leadership role on the Reporting Standards Board. Providing a transparent, best-in-class reporting experience for LPs is critical, and, in this role, I will work closely with my colleagues on the Board and Council to enhance adoption of the recently issued 2020 Reporting Standards and our other ongoing key Reporting Standards initiatives. Everyone in the real estate investment industry wins when we have thoughtful and clear reporting standards, and I look forward to continuing to work towards this goal.”

Reporting Standards Volume II manuals updated December 2020

The Reporting Standards Volume II manuals and tools listed below were updated as of December 2020.
– Fair Value Accounting Policy Manual
– Performance and Risk Manual
– Valuation Manual
– TGER Example Disclosure & Guidance

The Reporting Standards and its associated manuals and tools are developed by industry participants for industry participants. Special thanks to the NCREIF Accounting, Performance Measurement, and Valuation Committee for their dedication and participation in the successful completion of these updates.
Click here to download the tool and manuals.