Guidelines

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General vehicle information, organisation, and governance

1.1 Vehicle documentation for reporting framework

RG01

The basis, frequency and timing of delivery of the audited and non-audited financial statements, and management reporting for investors should be defined in the vehicle documentation.

The investment manager should provide at least one interim report to its investors, in addition to the annual report.

Annual

Interim

RG02

For annual reports, define any terms or KPIs not already included in Definitions.

Annual

1.2 Content and frequency of reporting

RG03

The quantitative information presented in the SDDS should be provided either using the SDDS template proposed by INREV or otherwise disclosed in annual and interim reporting to investors.

Annual

Interim

RG04

The financial statements provided in the annual report to investors should be audited.

Annual

RG05

Elements of the overall package of annual and interim reporting to investors, however configured, should be internally consistent.

For instance, information presented in the manager, property and other reports should be consistent with information in the SDDS template, if separate, and the financial statements. Also, the basis of preparation of information contained in interim reporting to investors should be consistent with annual reporting to investors. Any differences or exceptions should be explained.

Annual

Interim

RG06

Full year-end audited financial statements should be provided to investors. These should contain:

Balance sheet;
Income statement;
Statement of changes in equity;
Statement of cash flows;
Notes to the financial statements.

SDDS references:

1.13 Accounting standards, 1.15 Vehicle Auditor, 3.3 Cash and cash equivalents, 3.4 Total Number of Outstanding Shares, Section 11. details of fees paid to the manager and affiliates, 13.6 Net Capital Contributed – During the Reporting Period.

Annual

RG06 - Debt funds

Full year-end audited financial statements should be provided to investors. These should contain:

Balance sheet;
Income statement;
Statement of cash flows;
Notes to the financial statements.

SDDS references:

Annual

RG07

Abridged interim financial statements should be provided to investors. Investment managers and investors should agree on the format of the interim financial statements.

Interim

RG08

For interim reports, use the same terminology and KPIs as used in the annual report. If new terms or KPIs are used, the investment manager should explicitly define them.

SDDS references:

Same as RG06

Interim

RG09

For annual reports, describe the overall status of the vehicle’s INREV compliance.

The governing body of the vehicle, in collaboration with the investment manager, should thereafter, periodically, perform a self-assessment against the intended reporting framework and take actions as appropriate. The level of adoption of the guidelines and the annual score representing implementation effectiveness should be disclosed to investors in the annual report. This process is facilitated by using INREV’s self-assessment tool, the use of which is described in more detail in the Adoption and Compliance Framework of the INREV Guidelines.

In doing so, disclose the level of compliance with INREV Guidelines by module. Include any relevant explanations, reconciliations and calculations as appropriate. Additionally, disclose the result of the INREV self-assessment tool with commentary on how the self-assessment score compares to the level of compliance assessed by the investment manager.

Management (in the event that, for instance, the INREV Governance framework is not being adopted) and/or independent non-executive directors/those in charge of governance should review this statement and the basis for making it.

Annual

RG10

For interim reports, disclose the level of compliance with INREV interim reporting guidelines. Reference should be made to the annual report for detailed description of the level of compliance with reporting requirements.

Interim

RG11

Disclose that the interim report should be read in conjunction with year-end investor report.

Interim

1.3 Vehicle characteristics and governance

RG12

General information on the vehicle characteristics including, among others, name, domicile, legal form, vehicle style (by reference to INREV’s vehicle style definitions), description of vehicle structure, vehicle currency, vehicle year-end.

SDDS references:

1.1 Vehicle Name, 1.7 Vehicle Jurisdiction, 1.8 Legal Vehicle Structure, 1.9 Vehicle Structure, 1.12 Vehicle Reporting Currency, 1.6 Vehicle Financial Year-end

Annual

Interim

Describe material changes

RG13

Contact details of the vehicle.

SDDS references:
1.3 Contact Person Name and 1.4 Contact Person Telephone

Annual

Interim

Describe material changes

RG14

Describe the vehicle’s governance framework and the organisation of management and administration. For example, identify the AIFM, administrators, trustees, depositories, general partners, risk managers, investment advisors, portfolio managers, asset and property managers, valuers and other key functions as appropriate.

Identify and discuss vehicle governance and oversight frameworks such as the use of independent non-executive directors and investor or other special committees, and how they operate.

SDDS references:
1.2 Investment Manager

Annual

Interim

Describe material changes

RG15

Describe the structure and governance principles of the investment manager organisation (rather than the vehicle), for instance on potential areas of conflict between alternative capital sources under management, conflict management processes, investment committee composition and processes, alignment through promote distribution etc.

Annual

Interim

Describe material changes

RG16

Describe the level of adoption of the INREV governance best practices.

Annual

Interim

Describe material changes

RG17

Annual and interim reports should describe any material changes to the level of compliance with the (vehicle) governance framework defined in the vehicle documentation.

Annual

Interim

Describe material changes

RG18

Present a short, high-level summary of the vehicle strategy.

SDDS references:
1.10 Style – defined by investment manager, 1.11 Style of the vehicle according to the INREV Style Classification

Annual

Interim

Describe material changes

RG19

Describe key milestone dates in the life of the vehicle (including vehicle term, investment period, closing dates, etc).

SDDS references:
Section 2 Critical Dates

Annual

Interim

Describe material changes

RG20

Describe the investment stage of the vehicle in the context of key milestone dates, by sector/geography.

SDDS references:
Same as RG19

Annual

Interim

Describe material changes

Vehicle performance and investors position

2.1 Capital structure and vehicle-and asset-level returns

RG21

Annual and interim reports should disclose any changes to the capital structure of the vehicle.

Annual

Interim

Describe material changes

RG22

In a tabular format, disclose the status of investor commitments and capital invested in the vehicle, and in particular:

Undrawn commitments;
Commitment drawn during the period (linkage should be made with underlying transactions);
Returns of capital/redemptions in the period;
Capital calls or subscriptions recorded subsequent to the period-end but before the release of the report;
Details of redemption requests received but not processed as at the date of the report and plans to meet these requests.

In addition, the investment manager should disclose the expected drawn commitments, returns of capital/redemptions, capital calls and redemption requests for the following period. The investment manager may include assumptions used to determine these projections.

SDDS references
Section 12 Capital Commitments & Secondary Market Activity, Section 13 Capital Contributions & Other Payments to Investors and Section 15 Capital Flows of the Vehicle (for calculation of the INREV Index)

Annual

Interim

Describe material changes

RG23

Summarise and comment on key investor returns and related metrics which are defined in Section 7 of the SDDS (including comparison with targets, points of reference and indices when relevant).

SDDS references:
Section 7 Performance (according to INREV Performance Measurement module)

Annual

Interim

In addition, the investment manager may also analyse the performance at an aggregated asset level for a group of assets or for each operating asset during the period by reference to relevant asset-level KPIs defined by INREV as well as the currency used in the performance measurement of each asset.

INREV Performance Measurement module reference:
PM03, PM19

Annual

RG24

Disclose and discuss details of share class NAVs (accounting NAVs, trading NAVs, INREV NAVs as applicable) and variances since prior period-end.

Annual

Interim

RG25

Disclose and discuss distributions made during the period and subsequent to the period-end (link with underlying transactions such as property disposals where relevant).

SDDS references:
Section 14 Distributions

Annual

Interim

RG26

Summarise how the vehicle’s fee structure impacts the vehicle’s capital structure and vehicle-level returns; for instance, describe any fee capitalisation arrangements.

SDDS references:
Section 18 Investor’s Portion of Fees to the Manager and Affiliates

Annual

Interim

Describe material changes

RG27

INREV NAV disclosure requirements

Investment managers should make the following disclosures related to the NAV computation:

The reconciliation between GAAP NAV and INREV NAV should be presented in line with guideline NAV 2;
Investment managers should explain material estimates and computation methodologies to enable investors to understand the components of the reconciliation between GAAP NAV and INREV NAV

Explanatory notes to the reconciliation should describe key assumptions, methods used, and in particular:

The basis for reclassifying certain shareholder loans or hybrid capital instruments as a component of equity;
The basis for the determination of fair value of investment property, self-constructed or developed investment property, property that is leased to tenants under finance lease, investment property held for sale and real estate held as inventory;
The basis of the estimate of other investments in real estate assets;
The basis for the determination of the fair value of indirect investments not consolidated;
Details of the methodology used to calculate the fair value of financial assets and liabilities;
The basis of the estimate of the fair value of construction contracts with third parties;
The basis of the estimate of the fair value of contractual fees;
Details of the assumptions used to estimate the fair value of deferred tax and the tax effect of INREV NAV adjustments.
Such disclosure gives an overview of the tax structure including, for instance, details of the property ownership structure, key assumptions and broad parameters used for estimating deferred taxes for each country, the maximum deferred tax amount estimated assuming only asset sales (eg, without taking into account the intended method of disposal) and the approximate tax rates used;
Reasons for making adjustments to the carrying value of subsidiaries having negative equity (non-recourse);
Under IFRS, the fair value of investment properties does not take into account the expenses incurred by the seller when selling a property. As with IFRS, no adjustment is required to include a provision for such costs in the INREV Guidelines, unless they are held for sale.

The investment manager should, however, estimate and disclose the amount of disposal costs likely to be incurred on the sale of properties, taking account of the intended method of exit, assuming an exit without duress and in the current market environment;

Set-up costs – description of impairment and reasons for booking if applicable;
Set-up costs – description of the reasons for departure from the five year amortisation period if applicable;
Acquisition expenses – description of impairment and reasons for booking if applicable;
Acquisition expenses – description of the reasons for departure from the five year amortisation period if applicable.

Annual

Interim

Describe material changes

RG28

The constituent elements of the fee and expense metrics calculation should be disclosed in the annual report.

Annual

RG29

The information in the following tables should be disclosed in the annual report.

See table in Fee and expense metrics module.

Annual

RG30

A disclosure table should be presented that provides an analysis of all the components of the fees charged by the investment manager, including any element of performance fee or carried interest or any other such arrangement, or by any other affiliate or related party of the investment manager.

See table in Fee and expense metrics module.

SDDS references:
11.17 -11. 20 INREV Expense Ratio, 11.23 REER, and Section 18 Investor’s Portion of Fees to the Manager and Affiliates

Annual

Manager's report

RG31

Summarise and discuss macro-economic factors which have, or may have, a material impact on the results of the vehicle.

This should include information such as economic growth factors and their impact on the demand for new rentals, the supply of property or availability of development opportunities. Include also details of material changes in the tax and regulatory environment and debt financing conditions, such as movements in interest rates and financing terms.

Annual

RG32

Tabulate for clarity a summary of significant events affecting the vehicle during the period as well as significant events anticipated in the 12 months from the balance sheet date. Provide a brief commentary on significant activities of the vehicle including acquisitions, disposals, distributions to investors, and changes to the overall financing or capital structure during the period.

Annual

Interim

RG33

Analyse the performance of the vehicle during the period by reference to relevant vehicle-level KPIs defined in sections 3.1, 3.2 and 5 of the SDDS, which include information such as the NAV, key financial ratios, valuation results, realised gains and losses and information related to operating results.

SDDS references:
3.1 Gross Asset Value of Vehicle (GAV), 3.2 Net Asset Value of Vehicle (NAV) and Section 5 Result of Vehicle per Accounting Standards

Annual

Interim

RG34

Describe and comment on the structure of fee arrangements with investment managers and affiliates (including details of any relevant capitalisation or disbursement programs, year-end balances, amounts earned, accrued, paid or clawed back). Link accrued and un-accrued amounts with the realisation of performance criteria.

When applicable, this description should include details of:

Vehicle management fees;
Asset management fees;
Performance fees;
Property management fees;
Acquisition fees;
Disposal fees;
Development fees;
Financing fees;
Other related-party fee arrangements.

Refer to the relevant sections of the financial statement disclosures for details as appropriate.

SDDS references:
Section 18 Investor’s Portion of Fees to the Manager and Affiliates

Annual

Interim

Describe material changes

RG35

Disclose the NAV of the vehicle and the basis of calculating it. Disclose to what extent the INREV NAV guidelines have been used to determine such NAV, and include details of adjustments made to reconcile the NAV with the financial statements. Include a description of the judgments and estimates used when determining the INREV or other NAV.

SDDS references:
Section 4 Reconciliation from Reported Net Assets to Fair Value (according to INREV Guidelines)

See G09 for Open end fund pricing best practice

Annual

Interim

Disclose the NAV and material changes

RG36

Discuss the current period performance in the context of the track record of the vehicle (for instance, over the last five years).

Annual

RG37

Describe all significant subsequent events affecting the vehicle since the period-end and comment on their impact on vehicle performance. Information at the asset level may be disclosed, if relevant.

Annual

Interim

RG38

Describe the likely developments in the vehicle’s activities and operations in the foreseeable future and how this is aligned with achieving the overall vehicle objectives.

Annual

RG39

Describe the impact of potential or implemented regulatory changes that affect or may affect the vehicle’s and assets’ operations and performance.

Annual

RG40

Describe and comment on any significant one-off events having an impact on the results for the period. This disclosure should include, for instance, costs related to litigation, abort deal costs, one-off property related expenses and any other extraordinary or exceptional items.

Annual

Interim

Property report

RG41

Describe and comment on current developments in the vehicle’s investment property portfolio by reference to, for example, occupancy level, tenant profile by area occupied, average rent, the percentage of newly developed property that has been let or sold, etc.

The following information may be disclosed for each asset, including but not limited to:

Net leasable area;
Weighted average (unexpired) lease term (years);
Occupancy rate;
Rental income;
Market rent;
Fair Market Value.

See RG23 for financial performance returns recommended at asset level.

SDDS references:
9.4 Total Number of Properties, 9.9 Lease Expiries < 2 years (based on rent) and 9.10 Weighted Average Unexpired Lease Term (WAULT)

INREV Asset Level Index references/ identifiers:
X2 Net leasable area, AF2 Weighted average unexpired lease term (years), AG2 Occupancy rate (%), AP2 Total rental income for the period, AQ2 Total market rent for the year (ERV).

Annual

Interim

RG42

Describe the business rationale for any significant acquisitions or disposals during the period, and their impact on the vehicle’s financial position and results.

SDDS references:
Section 8 Investment Activity during the Reporting Period, 5.9 Unrealised Capital Gain/(Loss) and 5.10 Realised Capital Gain/(Loss)

Annual

Interim

RG43

For interim reports, show a summary of the portfolio allocation by sector and geography.

SDDS references:
Portfolio allocation sheet

Interim

RG44

For annual reports, show a summary of the portfolio allocation by sector and geography and comment on it in the context of the investment strategy of the vehicle (refer to the detailed portfolio allocation sheet in the SDDS).

SDDS references:
Portfolio allocation sheet, number and amount of acquisitions and disposals (8.1, 8.2, 8.4 and 8.5)

Annual

RG45

Disclose the nature and frequency of property valuations, explaining how they reflect the expectations of investors and ongoing business needs of the vehicle (refer to PV15 of the Property Valuation module).

Describe the procedures and internal controls put in place to appoint external valuers and oversee the valuation process to ensure it is objective and free from any bias and not influenced by potential conflicts of interest.

At a minimum, disclose:

The valuation standards (such as RICS), methodologies and frameworks used in arriving at an opinion of value;
The identity and compensation of the external valuer and confirmation that fees are not linked to the outcome of the valuation;
Backtesting procedures for valuation (eg number of valuation reports backtested out of the total asset portfolio);
Number of years of collaboration with the external valuers and results of the last appointment review process;

Summarise and comment on the current property valuation methods and outcomes.. Include information on the methodologies used and the key market inputs and assumptions such as yields, discount or capitalisation rates. Describe any specific or special assumptions used in the property valuations such as assumed disposal scenarios, assumed capital expenditure and the treatment of transfer taxes.

At a minimum disclose (refer to PV21):

Information relevant to the approach taken across portfolios with different asset types and potentially different valuation methodologies;
Disclosures of market assumptions and their related explanations. The information regarding applicable market assumptions could, for example, include sensitivity analysis of rent movements and yield changes;
Disclosure of any limitations or reservations made by the external valuer in the valuation report;
Disclosure of significant issues related to valuation outcomes, eg covenant breaches and liquidity issues;
Disclosure and explanation of deviations from the underlying appraised value, either related to vehicle-specific circumstances or disagreements with the external valuer (refer to PV22 and PV23);
Disclosure of sustainability factors that have been taken into account when arriving at valuation outcomes;
In the event of significant changes in market value resulting from a rotation of the external valuer, the investment manager must perform an assessment of the main underlying assumptions and provide full disclosure of the rationale for such changes; and,
Disclose any disagreements between the investment manager and the valuer on the underlying market value of certain individual assets, including deviation from the market value.

SDDS references:
1.17 RICS Rules Compliant, 9.1 Total Fair Value of Investment & Development Portfolio, 9.2 Fair Value of Investment Portfolio, 9.3 NOI Yield and 9.5 Gross Leasable Area

Annual

Interim

Describe material changes

RG46

Disclose the proportion of the property portfolio which has been subject to an independent external valuation along with references to the name and qualifications of the valuers, and the date of such valuations. Include details of any modifications or reservations disclosed in the valuers’ reports.

See also RG14. Disclose the qualifications of the members of the governing body of the vehicle, who oversee the valuation process (refer to PV11 of the Property Valuation module).

SDDS references:
3.5. % of Real Estate Assets Valued during the Reporting Period, Externally and 3.6. % of Real Estate Assets Valued during the Reporting Period, Internally

Annual

RG47

Provide an analysis of like-for-like movements in the market value and rental income of properties held in the current and prior periods.

Annual

RG48

Comment on the development of rental growth and expected rental values by sector/geography. The market data provided should be relevant to the specific activities of the vehicle.

Annual

Interim

Describe material changes

RG49

Describe recent leasing renewal activity, including incentives given, rent-free periods and tenant improvement programs and expected future changes by reference to market trends in new lease terms.

Annual

Interim

Describe material changes

RG50

Summarise and comment on the development of vacancy rates and its impact on vehicle performance and future prospects.

SDDS references:
9.6 Net Leasable Area, 9.7 and 9.8 Occupancy, 9.16 Top Tenants (percentage of gross rental income)

Annual

Interim

Describe material changes

RG51

Discuss the development of property yields, including yields by sector and geography.

SDDS references:
9.3 NOI Yield

Annual

Interim

Describe material changes

RG52

Discuss the development of other key property information by sector and geography, when relevant.

Annual

Interim

Describe material changes

RG53

Identify and comment on rental concentration risk (either by expected rental value or actual rental value).

Annual

Interim

Describe material changes

RG54

Describe and comment on the level of property operating costs and, if significant, discuss the impact of specific factors such as service charge recoveries, bad debt write-offs and other property operating costs related to the vehicle’s performance.

Annual

Interim

RG55

If material, describe the impact of development activities on the vehicle by reference to, among other things, its investment strategy, development pipeline, stage of completion of developments, status of the sale of units or rental strategies.

Annual

Interim

RG56

Discuss and quantify significant capital expenditure programs either planned or being undertaken during the period for existing properties, such as renovations, extensions and improvements.

SDDS references:
8.3 Amount of Capital Expenditure

Annual

Interim

RG57

Quantify the amount of property development being undertaken during the period. Include details of the number of properties completed and either transferred to investment properties or sold during the period. Include details of development costs, related commitments, and the method of accounting for properties under development.

SDDS references:
9.11 Fair Value of Development Portfolio, 9.12 Current Development Exposure as % of GAV, 9.13 Projected Percentage of Current Remaining Undrawn Commitments to be Invested in Future Development Projects and 9.14 Cost of Development Portfolio

Annual

Interim

RG58

Describe and quantify the vehicle’s position in joint ventures and associate investments. Include details of, among other things, the methods of accounting for such positions, how they impact the overall financial and risk profile of the vehicle, and their business prospects.

Annual

Interim

RG59

Summarise and comment on returns from non-property investments such as positions in other vehicles, listed securities and other assets.

Annual

Interim

RG60

In exceptional circumstances, deviations by investment managers from property valuations as determined by external property valuers should be clearly explained and disclosed.

If there is a disagreement between the investment manager and the property valuer on the market value parameters, these parameters must be clearly explained and disclosed.

See more details at PV23 of the Property Valuation module.

Whatever the circumstances, appropriate internal procedures (including escalation measures) should be followed by the management in the event of valuation adjustments.

Annual

Interim

Risk management

RG61

Describe the principal risks faced by the vehicle. Describe and analyse the vehicle’s current exposure to such risks. Principal risks will cover, among others, areas such as:

Market risks (yield shifts, rental income, voids, etc.);
Credit and counterparty risks (exposure to tenant debtors, financial institutions etc.);
Liquidity risks (including debt maturity, covenant breaches, redemption requests and the financing of future contractual commitments);
Interest rate risks (exposure to floating vs. fixed rate debts);
Foreign exchange risks (including details of hedging strategy and unhedged exposures);
Operational risks (tax, regulation, key employees, reliance on service providers or key advisors, etc.); and,
Physical or transition risks related to climate change.

As an integral part of the disclosure of the description and analysis of principal risks and their current status, the specific ESG considerations and risks should be included – see ESG15 of the Sustainability module.

Exposure to shareholder loans should be analysed separately from external loans.

Annual

Interim

Describe material changes

RG62

Describe the overall organisation of the risk management function and refer to key policies and procedures to monitor and mitigate exposures to key risks and uncertainties.

This description should include details of how the management of ESG-related risks is integrated into the overall risk management function.

Annual

Interim

Describe material changes

RG63

Summarise the vehicle’s current risk appetite and tolerance levels.

Describe the level of compliance with this framework and comment on any specific breaches and remedial plans.

Annual

Interim

Describe material changes

RG64

In a tabular form, give details of the overall financing structure of the vehicle. Include information such as financing costs, lender, security arrangements, recourse arrangements, maturity, and interest and loan amortisation terms. Refer to the financial statement disclosures as appropriate.