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.

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!

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.

…continue reading

Source: NAREIM Dialogues Spring 2021