ANREV and PwC are pleased to publish the Real Estate Fund Managers’ Benchmarking Survey 2021. This is the second time we publish this Survey after 2017. The Survey attracted participation of 31 funds managers, representing more than US$1 trillion of real estate assets under management globally.

The publication gathers information about key industry operational trends and metrics of real estate fund managers with significant operations in Asia Pacific, including organisational information, governance, sustainability and risk management, administration, valuation, technology and operations, regulatory information and reporting.

Key findings include:

• Headcount: 42% of respondents report that they are expecting to increase headcount in 2022, indicating a positive outlook for Asia-Pacific business in 2022 and beyond.
• Sustainability and climate risk: 90% of respondents have a formal policy on sustainability and climate risk and 19% of respondents says sustainability and climate risk can be a deal breaker when making investment decisions.
• Investor reporting: 64% of respondents follow INREV Standards for investor reporting which is the highest amongst guidelines published by all industry associations.

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 used to calculate AUM, we are pleased to announce the launch of an AUM basis of disclosure tool to help investment managers facilitate clear and transparent reporting of AUM components.

The Global Standards Steering Committee (SSC) have developed this new excel based tool which includes drop down menus to specify how each of the AUM components is reported within the calculation. Once completed, the resulting amount of AUM can be reported with accompanying disclosures as deemed appropriate by the preparer.

Another step for transparency: Further clarity around AUM

Within the non-listed real estate industry, the definitions, calculations and uses of ‘Assets Under Management’ (AUM) vary significantly. As such, INREV, ANREV and NCREIF PREA Reporting Standards 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 component. 

ANREV Professional Standards Committee and PwC invited investment managers to a series of round table discussions, hosted in Hong Kong and Singapore, which provided opportunities for managers to discuss with their peers issues they experienced through the year especially around valuation uncertainties and specific disclosures linked with the COVID 19 pandemic.

The topics that were discussed during the events were:

• COVID 19 in general, length of the pandemic and underappreciation of long term impact
• Managing cash flow income, tenant credit risk, and meeting loan covenants
• Rent collection and rents relief / deferral requests from tenants and any impacts to valuation
• Valuation, including working with valuers in respect of caveats or material uncertainty clauses
• Liquidity in general and whether redemptions and subscriptions should be met on NAVs today for OE vehicles
• Investors’ inquiries and expectations on disclosures

A summary of the discussions may be found in the links below.

Additionally, ANREV has conducted an additional survey investigating the ‘Impact of COVID-19 on valuations’. The survey was distributed to fund managers during the data collection of ANREV Quarterly Index Q3 2020. They were asked to fill in the extra questionnaire to look into the impact of the “Material Uncertainty clause” on asset valuations, suspension of trading and status of rent collection.

To access a snapshot of the survey results please follow the link below.

Compliance of Asia Pacific non-listed real estate funds with the INREV Guidelines significantly improved since last survey

The Review of Investor Reporting Trend survey provides an insight into current market practices in investor reporting across non-listed real estate vehicles investing in Asia Pacific and especially the extent to which reporting complies with the requirements and recommendations of the INREV Guidelines. The survey has been undertaken by PwC.

The Code of Tax Conduct is a new best practice module in the INREV Guidelines on 1 January 2021. The Code comprises a set of tax-related best practices designed to be applied across the lifecycle of a real estate investment vehicle’s strategy. It aims to achieve a shared vision on tax matters for the non-listed real estate investment industry and thereby to help INREV and ANREV members address tax matters internally within their organisations and externally with regard to others’ expectations and interests.

Closely linked to both corporate governance and ESG, a contemplated review of the INREV Guidelines in 2021 may consider whether and how to more closely integrate recommendations and best practices in these three areas within the INREV Guidelines. In addition, online tools for self-assessment of adopting the Tax Conduct best practices may also be developed next year.

The Code of Tax Conduct will apply to reporting periods ending on or after 31 December 2021. The Code is being made available to members now so that they can become familiar with it throughout 2021, while INREV and ANREV considers the appropriate next steps for further integration and support to members. 

These templates will give members additional insight into the applicability of the INREV NAV adjustments for specific GAAPs to come to the fair value of the underlying assets and liabilities and to adjust for the spreading of costs that will benefit different generations of investors. 

As the end of a difficult year is approaching, ANREV Professional Standards Committee and PwC invited investment managers to a round table discussion which provided opportunities for managers to discuss with their peers issues they experienced through the year especially around valuation uncertainties and specific disclosures linked with the COVID 19 pandemic.

The topics that were discussed during the event were:

• COVID 19 in general, length of the pandemic and underappreciation of long term impact
• Managing cash flow income, tenant credit risk, and meeting loan covenants
• Rent collection and rents relief / deferral requests from tenants and any impacts to valuation
• Valuation, including working with valuers in respect of caveats or material uncertainty clauses
• Liquidity in general and whether redemptions and subscriptions should be met on NAVs today for OE vehicles
• Investors’ inquiries and expectations on disclosures

A summary of the discussion may be found in the link below.

The Hong Kong Government gazetted the new Limited Partnership Fund Bill on 20 March 2020.  The Bill had its first reading on 25 March 2020 and is expected to become law later this year.

Specifically designed for private funds and enabling the establishment of onshore funds in Hong Kong, this historic legislative reform will deepen and strengthen the ecosystem that supports the funds industry and better position Hong Kong for growth as a leading asset management hub in the Asia Pacific region.

Join to hear from the HKMA and experts from EY and Sidley on the implications to our industry.

During the briefing, John Moutsopoulos and Grant Mackinlay of KPMG Australia delivered a presentation and discussion on recent changes to Australia’s regulatory framework for foreign fund managers that wish to raise capital from Australian investors; specifically:

• Update on ASIC s recent repeal of licensing exemptions for foreign fund managers who have clients in Australia or wish to raise capital in Australia;
• legal and tax implications for ANREV members with an existing book of clients in Australia including transitional arrangements;
• legal and tax implications of key options for ANREV members going forward to raise capital in Australia including reliance on other licensing relief, applying for a foreign licence, or setting up a local office and applying for a standard license.