By Greg MacKinnon, Director of Research at PREA
Greg MacKinnon, PREA’s Director of Research, recently met with Barbara Flusk, Head of Real Asset Fund Services at Citco Fund Services, (USA) Inc. and a member of the NCREIF PREA Reporting Standards Council, and Anne Anquillare, CEO and President of PEF Services LLC. Both were members of the team charged with developing the Total Global Expense Ratio (TGER).
Source: PREA Quarterly Fall 2020
Reporting Standards Meeting
NCREIF Members please join us on Thursday, November 12 at 10:30 am Central for the Reporting Standards Council session during the NCREIF Virtual Fall Conference 2020.
Moving to the Next Phase: Investor Reporting and ESG
The prominence of ESG considerations for real estate investment continues to explode. Seems like everyone has something to offer including standard setters, index and product providers, governmental agencies, investment managers and of course, investors. Should the Reporting Standards have a seat at the table? Which one(s)? Moderated by Peter Bloomfield, Partner at KPMG and member of the Reporting Standards Council, a panel representing large and small investors and investment managers will discuss how they are addressing ESG within their organizations and ways they think the Reporting Standards can add value within the private real estate investment industry.
Moderator: Peter Bloomfield, Partner, KPMG
Panelists:
Registration is open to all NCREIF members here.
The nomination period to identify new members for the NCREIF PREA Reporting Standards Council is now open through August 31, 2020. New appointees will serve an initial three-year term beginning November 1, 2020.
The mission of the Reporting Standards initiative is to manage and promote transparent and consistent reporting for the real estate industry that facilitates investment decision-making. Over the years, the Reporting Standards have become the “go to source” for reporting in the investment real estate industry. For instance, the Reporting Standards was consulted with ILPA to develop a real estate supplement to the ILPA Reporting Template; GIPS for GIPS 2020 with respect to reporting for private market investments; and was cited by the AICPA in AICPA Accounting and Valuation Guide Valuation of Portfolio Company Investments of Venture Capital and Private Equity Funds and Other Investment Companies.
At the end of 2019, the Reporting Standards were reissued. The new edition of the Reporting Standards (RS 2020) includes the first global standard, Total Global Expense Ratio (TGER); and addresses complex issues of particular importance to closed-end fund managers including performance measures and valuation practices. A plan was also initiated to advocate and promote the Reporting Standards through education, publications and other forms of outreach. Fund reporting standards that are relevant, transparent and applicable to all industry participants have been developed but there is much more to do. The strategy going forward will include: continuing our successful collaboration with INREV and ANREV to align global reporting standards by expanding our Global Definitions Database and increasing transparency surrounding AUM reporting; expanding our outreach through education, publications and social media; and continuing our ongoing dialogue with our foundational standards organizations (FASB, GIPS, USPAP) and other related industry groups which engage in standard setting activities. Beginning later this year, the Reporting Standards will embark on the development of best practices surrounding investor specific and asset specific reporting. In this current world climate, expanded property specific information is frequently being requested by investors and provided with minimal standardization. These activities will further expand the overall relevance and utility of the Reporting Standards now and for the foreseeable future.
The Reporting Standards Board is looking for candidates who want to take a leadership role in the industry and are ready to make an impact.
Seasoned institutional real estate professional members of NCREIF and PREA who possess discipline specific expertise and an interdisciplinary perspective are encouraged to complete the nomination form. In addition, nominations for qualified candidates may be submitted from NCREIF committees and PREA affinity groups. Click here for more information about the qualifications and responsibilities of Council members.
The Reporting Standards Board expects to complete the selection process by the first week of October and nominees will be notified of the Board’s decision shortly thereafter. New Council members will be asked to join the Council during its fall meetings November 2-5. In August, NCREIF will be announcing a decision as to whether to hold the fall conference in person in Orlando, Florida or virtually.
Please submit completed nomination forms by September 15 or direct any questions relating to the nomination process to Marybeth Kronenwetter, Director, Reporting Standards.
More information on the Reporting Standards can be found at www.reportingstandards.info and by following our LinkedIn company page.
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:
The Guide is available on the Reporting Standards website. Questions or comments can be sent to Marybeth Kronenwetter, Director, Reporting Standards (marybeth@reportingstandards.info).
The Global Definitions Database – your one stop shop for global definitions related to non-listed real estate – has new sorting and filtering features to increase functionality.
The Total Global Expense Ratio (TGER) will be required for year-end 2020 reporting. If you currently report the INREV Total Expense Ratio (TER), register for INREV’s April 9 webinar which will discuss how to make the transition from TER to TGER. Register at: https://www.inrev.org/training/00872/professional-standards-briefing-total-global-expense-ratio-tger. If you cannot make this call, we are planning to have information available concerning a replay soon and will post to the Reporting Standards page on LinkedIn.
Reporting Standards 2020 is now available and includes a comparable measure of global fee and expense load as well as enhancements to the reporting of time-weighted returns, IRRs and valuations for closed-end funds.
The Reporting Standards Board and the Reporting Standards Council work to provide greater transparency in reporting for investors and managers across all private real estate funds and separately managed accounts.
The highlights for the 2020 edition include:
For more information on the Reporting Standards and accessing the latest reporting updates, please visit www.reportingstandards.info or email administrator@reportingstandards.info.
The Reporting Standards contain required and recommended elements of reporting (Volume I) as well as best practices, methodologies, checklists and other guidance (Volume II).
The industry looks for common metrics to report and compare performance of real estate investment vehicles that operate across different regions of the globe.
However, in practice we use different NAV calculations in different regions. To better understand the differences between IFRS, INREV NAV and US GAAP Fair Value NAV a comparison and first gap analysis was developed by INREV, ANREV, NCREIF and PREA Reporting Standards.
The resulting short paper explains the main differences when calculating NAVs across regions and the potential impact of these differences.
This is an initiative from the Global Standards Steering Committee.
To bring consistency and transparency of terms when looking at the investment structure of vehicles across different regions, the Global Definitions Database (GDD) has been enriched with 18 new definitions:
The GDD is an initiative of the Global Standards Steering Committee, established as a collaboration between INREV, ANREV, NCREIF and PREA. The database provides the industry with one unique depositary of definitions that will help increase transparency and align the industry globally.
Exposure Draft: IRR Reporting for closed-end funds: Providing transparency, comparability and relevance to Internal Rate of Returns (“IRR” or “IRRs”), gross of fees and promote, net of fees and promote
Comments due by November 8, 2019
IRR is perhaps the most widely accepted performance measure relied on for the strategic decision making for closed-end funds. Yet, there is a considerable degree of inconsistency on how internal rate of returns are being calculated, specifically when reported as gross and net of fees and promote. The NCREIF PREA Reporting Standards Council approved the formation of a task force that conducted extensive outreach, research and analysis of this complicated topic. This exposure draft and included recommendations are the culmination of that work.
The NCREIF PREA Reporting Standards Board and Council invite all interested parties to comment on the nine-question exposure draft. Feedback and response are critical to ensure that the Reporting Standards reflect industry best practices as well as meet the need for transparency, consistency and comparability that facilitate informed decision-making.
The comment period for the above referenced exposure draft concludes on November 8, 2019.
reportingstandards.info