Activity Report
2018

Professional Standards

INREV’s Professional Standards programme works in close collaboration with the various INREV committees to develop and nurture a set of guidelines and standards for the European non-listed real estate market, with an increasing global focus. Topics in focus include corporate governance, financial and investor reporting, fee and expense metrics, performance measurement, due diligence, secondary markets and liquidity, and ESG.

A world first: Total Global Expense Ratio

In March 2018, we released for industry consultation the first globally comparable measure of fees and costs named Total Global Expense Ratio (TGER). This proposed global standard was designed to be simple, practical and to facilitate comparison and consistent reporting of fees and costs associated with investing and operating real estate vehicles in different regions. Over 40 companies provided a detailed response to the industry consultation, which ran between March 2018 and June 2018. Integration of TGER into the INREV Guidelines and joint global release is expected by 2020.

Global Definitions for a harmonised industry

Substantial progress was also made on the Global Definitions Database – a single depositary of definitions for the global real estate market – bringing enhanced visuals and a simplified navigation. The database was also enriched with fee and sustainability-related terms. At the end of 2018 the database included more than 500 definitions. INREV will continue to develop and add definitions as they are agreed upon at a global level with NCREIF, PREA and ANREV.

Revised DDQ more streamlined than ever

The Due Diligence Questionnaire (DDQ) remains INREV’s most popular tool, used by more than 60% of our members in 2018. With the support of the Due Diligence Committee, we have updated the DDQ structure and its content, to make it leaner, while still providing the level of detail needed at the different stages of the due diligence process. The updated DDQ was released for industry consultation in January 2018. We launched the new streamlined edition in July 2018 with translations of the questionnaire being rolled out in German and Japanese in October 2018. To further help members implement the template, we released an implementation kit, including a user manual and a change log.

Open end fund pricing study: First conclusions presented

In July 2018, we published, together with AREF, the first conclusions of an industry wide study conducted into open end fund pricing in Europe, aiming to foster greater consistency and clarity on pricing policies.

Building upon the foundations that were laid in phase one, we started phase two in September 2018 to explore more focused topics such as governance around pricing mechanisms and the interaction of secondary markets and pricing. These efforts are set to continue throughout 2019.

New insights to ensure open end fund liquidity

In December 2018 we released enhanced guiding principles on vehicle liquidity to include new insights on secondary trading. In addition, the global landscape section has been extended with highlights from local practices in the US. To continue to educate and assist in creating further liquidity in the market with the support of the committee we also released a Guide to Secondary Trading in February 2018.

ESG library goes global

In September 2018, we have consolidated the ANREV library and the INREV library of ESG-related resources to create a Global ESG Library for the non-listed real estate industry. Through the new Global ESG collaboration, members can now easily navigate and gain access to an evolving depository of featured reports, papers, and case studies ranging from a variety of geographic locations (most notably Europe, and Asia Pacific). The library includes over 40 publications and is growing monthly.

In 2019, we will continue to place more emphasis on exploring, promoting and sharing knowledge on ESG factors relevant to non-listed real estate by combining expertise of corporate governance and sustainability committees for a unified ESG view.

Tailored Guidelines for multiple vehicle types

To ensure that the INREV Guidelines remain as relevant as possible to all vehicle structures we introduced online filters for separate accounts, joint ventures and club deals, in addition to open end and closed end funds. This will make it easier than ever for members to select and focus on the guidelines that apply to the vehicle type they are most interested in. This project covered all the Modules within the Guidelines. In addition, topics such as corporate governance, liquidity and debt funds are expected to benefit from further tailoring in the coming years.

Corporate Governance Online Assessment updated

In December 2018, the questions in the Corporate Governance section were updated to fully align the assessment scoring system with the other modules. The format is now consistently applied elsewhere in the tool, making it easier to visualise and to compare results.

INREV's assessment tool lets managers measure their vehicles against industry best practice by determining its level of compliance with the INREV Guidelines.

Research

INREV research is the go-to platform for global insights on the non-listed real estate industry. Drawing upon INREVs extensive proprietary data which covers a range of topics, the research seeks to anticipate the direction of the non-listed real estate industry globally.

Published in 2018

6 Evergreens: Investment Intentions Survey, Capital Raising Survey, Fund Manager Survey, Funds of Funds Study, Funds Termination Study and Management Fees & Terms.

3 ad-hoc reports: A Second Look at Performance Persistence Among Core Open End European Real Estate Funds, Understanding Real Estate Illiquidity Premiums Better and Does Specialism Lead to Improved Investment Performance?

Management Fees and Terms Study welcomed record participation

The Management Fees and Terms questionnaire was updated to reflect the most recent changes to the Fee and Expense Metrics guidelines module. The report was published with the highest sample on record, 418 vehicles with 155 providing TER information and 111 providing REER data, a clear signal of an industry showing increased commitment to transparency.

Increased coverage, market representation and usage for Evergreens

The global surveys (Investment Intentions, Capital Raising and Fund Manager surveys), carried out in conjunction with ANREV in Asia Pacific and NCREIF and PREA in the US, reached record numbers of participation and market representation grew further.

Academic research explores if specialisation leads to improved investment performance

Upon receiving the INREV Research Grant, The University of Cambridge utilised INREV index data to explore whether specialisation leads to improved investment performance. The results of the study were presented at the 2018 ERES Conference in Reading, UK.

Enabling research analytics

Excel supplementary chart books were introduced to complement several of the survey reports and to facilitate further analysis on the non-listed real estate industry, enabling members to carry out their own analysis and to allow for deeper analysis of the survey data.

Exploring the Investor Universe

Local researchers across 8 countries: Finland, France, Germany, Italy, Netherlands, Sweden, UK, Switzerland were appointed to carry out an update of the 2010 – 2012 study on the Investor Universe. The research aims to explore the European institutional investor landscape, the motivations for investing in real estate and the hurdles that prevent from doing so. The series of reports will be published in 2019.

Passing the baton to the next generation

As part of INREV’s University Outreach programme, live presentations were given to students and faculties of 8 leading universities to increase the knowledge and further the understanding of non-listed real estate, and to encourage the use of INREV data to further the field of non-listed real estate research. A demo of INREV’s online analytic tools was presented at the 2018 ERES Conference, and a joint round table discussion between ERES, INREV and IPF explored the application of real estate derivatives in Europe.

Market Information

INREV market information is an independent source of comprehensive data on the non-listed real estate industry that supports all aspects of the real estate investment process, from asset allocation to performance measurement.

The market information programme includes:

8 Indices,: INREV Annual Index, INREV Quarterly Index, Global Real Estate Fund Index (GREFI), Global Investor Index, German Vehicles Index (annual & quarterly) and IRR Index (annual & quarterly)

3 Databases: INREV Vehicles Universe, Debt Funds Universe and Funds of Funds Universe

3 Online analytical tools: Index Analysis Tool, German Vehicles Index Analysis Tool and Investor Vehicles Analysis Tool.

In 2018, INREV published 24 market information reports and launched a new IRR Index.

Historical Data Collection Project provides data back to Q2 2000

Owing to the success of the Historical Data Collection project the history of the INREV Quarterly Index was extended back to Q2 2000, providing the non-listed real estate industry with over 18 years of quarterly fund performance data. The extended history of the Quarterly Index has enriched the data for the non-listed real estate industry allowing for greater insights into the evolution of the real estate fund industry and deeper analytics into this sector.

Long-awaited IRR Index is here

The INREV IRR Index was launched on the back on the success of the Historical Data Collection project in May 2018. The consultation release included 191 closed end vehicles across vintages from pre-2002 to 2017. The Index measures the internal rate of return performance of European closed end non-listed real estate vehicles since inception and is published on a quarterly basis.

Asset Level Index surpasses €100 billion target

The initiative, launched in 2015 and supported by 32 founding members (29 managers and 3 investors) was welcomed in 2018 by the release of the Data Input Tool which enables users to mass upload, harnessing the latest technology with automated validations for the verification of data. Following this, the Asset Level Index Portfolio Analysis was launched, enabling users to analyse portfolio of assets with an interactive dashboard that helps to keep on top of the asset portfolio. The Asset Level Index is on track to be launched at the 2019 INREV Annual Conference with a total to date inclusion of seven thousand assets of more than €140 billion in value, exceeding the launch target of €100 billion.

A rich and diverse array of promotional activities

In 2018, promotional activities organised to increase usage of INREV’s suite of market information tools covered a wide range of platforms including regular 1:1 demos of the website and tools, presentations to members and prospects, press releases, contribution to media articles and an active and engaging twitter account.

Far reaching real estate analytics: Snapshots and Excel supplements for all

Enabled in 2018, all Index publications are now accompanied by a snapshot and an Excel supplement to improve the application of the data and to facilitate analysis in the European non-listed real estate funds industry. The Index and Vehicles Universe publications were also revamped to better showcase the analytical possibilities of the index and universe data. GREFI was also updated with a new look and feel in line with INREV’s co-branding.

Public Affairs

The Public Affairs team in Brussels, together with the Public Affairs and Tax committees, worked to improve awareness and understanding of the non-listed real estate industry and the significant contribution that it makes to the European economy among European policy makers. Our aim is to ensure that members’ interests are fully accounted for in any new EU legislation or policy initiatives.

Real Estate’s significant contribution to sustainability, the real economy and European cities

In September, INREV held an event in Brussels together with GRESB and RICS, where the results of the GRESB annual survey were presented and we discussed the role of real estate investment in supporting European sustainability goals, while supporting the Commission’s work on sustainable finance.

The same month, we released an update of the Real Estate in the Real Economy study, which again confirms that commercial real estate significantly contributes to European economic growth and job creation. This study is highly effective in discussions with European policy makers and the new roster of MEPs following re-elections.

In December, we held an event in the European Parliament for MEPs, Commission officials and other policy makers on ‘Innovation, Technology and Real Estate: building cities for Europe’s future’. The event was co-sponsored by European Parliament Urban Intergroup Chair, MEP Olbrycht, and a number of other European real estate industry associations joined the event.

The impacts of Brexit

The impacts of Brexit on the non-listed industry, especially a worst-case hard Brexit, continued to be a focus in discussions with members in events, training courses, tax and regulations briefing calls and snapshot briefings. INREV led the development of an aligned real estate industry statement on the guiding principles for future EU-UK relations, which was re-issued in December in hopes of informing Brexit negotiating policies.

Leveraging on MSCIs Solvency II update on real estate volatility

In a private meeting with EIOPA Chairman Bernardino in Frankfurt and meetings with other policy makers in Brussels, INREV presented the update of the Solvency II study carried out by MSCI that was released in 2017. This update, which provides an additional six years of investment data and five new countries, provides fresh evidence to support a Solvency Capital Requirement for real estate that more accurately reflects the volatility of real estate investment in Europe. We are hopeful that the data will lead to a more appropriate standard model real estate solvency capital requirement for European insurers as part of the EIOPA 2020 review of Solvency II.

AIFMD: A collaborative review

During the year, INREV worked closely with KPMG as it conducted a review of AIFMD for the European Commission. We organised meetings between the KPMG team and both the Public Affairs Committee and the European Real Estate Forum, and provided data useful for the review, resulting in a report to the Commission that well reflected our views on the impact or AIFMD and areas such as differing definitions of pre-marketing and external valuer liability where improvements can be made.

European Real Estate Forum: Continuing to harmonise efforts

INREV continued to play a leading role in the European Real Estate Forum (EREF), which now has 32 participating associations, including European, national and global associations. Five live EREF meetings were organised during the year to increase information sharing and alignment of efforts among European real estate industry bodies. The group is significant in improving coordination on a European level in a spirit of open dialogue and exchange. Its objective is to improve the public awareness about institutional investment in real estate and increase understanding of its social and economic value.

Industry responses to EU and OECD Policy Proposals

In 2018, INREV drafted and submitted 3 responses on a wide range of policy issues: European Commission survey on AIFMD, UK draft Finance Bill consultation on non-resident capital gains taxation, and Guiding principles on future EU-UK relations: the real estate investment perspective.

Tax and Regulations Briefing Calls

INREV continued to offer and promote the Tax and Regulations Briefings, a monthly conference call presentation where experts present their insights and answer questions on current tax and regulatory issues facing our industry. On average, approximately 30 members joined the calls and another 40 to 50 members listened to the recordings. Topics covered included UK capital gains tax reform, the US Tax Reform Act’s impact on investment in Europe, the new Luxembourg-France Double Tax Treaty, the EU action plan on financing sustainable development and the new Belgian Specialised Real Estate Investment Fund (SREIF).

Training & Education

The INREV Training and Education programme was enhanced in 2018 to include one new course, a revamp of all course programmes, and a wide range of webinars and various opportunities for young professionals to engage with the industry at an early stage in their career. In 2018, we continued to engage with the industry and promoted the new INREV/Henley Certificate in Non-Listed Real Estate.

Throughout 2018, INREV hosted 989 attendees across various educational activities, including attendance at courses, webinars, Link and Learn’s and Young Professional Get Together initiatives.

Training course attendance up

Courses that took place in 2018 were attended by 363 attendees, representing 188 member companies, against 360 from 121 companies in 2017. Investors, including multi managers, represented a significant proportion of attendees comprising 21%. The courses continued to be rated highly, averaging 4.4 on a scale of 1 to 5 with the North American Course receiving a score of 4.7 and the Foundation Course and Advanced NAV both receiving a score of 4.6.

New course on investing in alternatives

Reflecting the trend for investing in alternatives, a new course was introduced on the topic, ‘Investing in RE Emerging Sectors: The Rise of Residential’ which took place in May 2018, attended by 27 attendees and scored a rating of 4.3.

INREV/Henley Certificate records its first alumni

To further support the industry’s next generation in their professional development, INREV has continued to partner with the Henley Business School to offer the INREV / Henley certificate in European Non-Listed Real Estate Investment. The Certificate sets the educational standard for the industry in giving members the opportunity to formalise their expertise into an industry recognised qualification and combines practical application with academic rigour. In 2018 we promoted the Certificate at events and training courses, on the INREV website, social media channels and in a variety of meetings with members. The first student graduated in March 2018 and 16 more members signed up, with a further 5 graduates going on to successfully achieve their certificate throughout the year.

Staying ahead of the curve

To ensure that course content remains relevant and topical, we reviewed the content and structure of all courses in 2018. This activity was done in close consultation with the Training Committee and the course leaders, taking delegate feedback from previous courses into consideration. A new case study came to fruition from the consultation and will be used for Debt Financing, Portfolio Construction I and II courses and Fund Structuring.

Paving the way for E-learning

To continue meeting the learning and development needs of our members we investigated new e-learning formats and possibilities. In 2018, the foundations were laid to launch an expanded scope e-learning module in 2019, with the first module focusing on Net Asset Value (NAV).

Informing and educating with webinar

To disseminate knowledge on the industry to as many members as possible, quickly and efficiently, a wide range of webinars on topics such as Global investment intentions, MIFID, DDQ, Global fees and expense metrics, Historical data, Health and well-being and INREV/GRESB on ESG performance were delivered. 7 webinars were conducted in 2018 with 301 delegates from 149 member companies attending.

Linking and Learning on the rise

In 2018, the Link and Learn Programme was attended by 137 attendees from 74 member companies, compared to 129 attendees from 70 member companies in 2017. The four events were held across Stockholm, Amsterdam, London and Munich.

Get Together and Christmas Drink initiatives

In 2018, we continued to offer Summer Get Together initiatives and Young Professional Christmas Drinks as part of the programme, attracting 188 attendees from 85 member companies, compared to 206 from 93 companies in 2017. The events included site tours, as well as social gatherings and took place across London, Hamburg and Rotterdam.

Academic outreach firmly on the agenda

In 2018, the University outreach programme was further strengthened to increase the knowledge and understanding of the non-listed real estate industry with lectures delivered at the Cass Business School, KU Leuven, HSLU, University of Amsterdam, Regensburg and University of Ulster.

Communications

In 2018, INREV took the time to reflect and conduct a review of where we are as an industry association and where we need to go in the future. We continued to reach out to existing members and potential new investor members to increase their awareness of the benefits of INREV. There was also a strong emphasis on enhancing the online user journey by increasing the accessibility and visual appeal of information.

The Vision Project- we listened, learned and now we are acting

For our 15-year anniversary, INREV decided to conduct a thorough self- review. We listened to the views and opinions of a diverse sample of members to find out how business models are changing, what we are doing right and how we need to adapt to continue being relevant for member business needs. We heard that business models are shifting from a pan-European strategy to a global strategy, and global players are entering the market at an increasing rate. Also, that our balance of services and member representation are what makes INREV unique. The outcomes are reflected in the 2019-2021 Business Plan.

Member Outreach Programme

In 2018, with the support of our Member Relationship Manager, over 170 one-to-one meetings with members took place, to ensure they were informed on the wide-ranging benefits of INREV membership and to see if there was anything INREV could do to support them further. In addition, various webinars were held to present the benefits to members online. Over 80 web-based demonstrations were held for members as training for the use of our different tools and for non-members to demonstrate their potential.

A top priority for the year was to continue to reach out to existing and potential new investor members. Prospects attended our flagship events and several investor invitation-only meetings were held as part of the investor outreach programme. Fifty-six new members, a record number, joined during the year, including 8 institutional investors.

Social media on the rise

Work continued to increase INREV’s visibility and reinforce its position as the voice of the industry, through a social media plan encouraging discussion on key INREV initiatives. The use of infographics, videos and commentaries by key INREV staff helped to maintain discussions on social media channels such as Twitter and LinkedIn. In 2018, the number of members following INREV on LinkedIn rose by 24% from 2,393 to 2,973. Twitter followers increased by 28% from 947 to 1,209.

INREV in the press

External media audiences again followed INREV’s news and opinions closely in 2018. In total INREV achieved 147 pieces of coverage in key media, of which 129 were in national and international business media such as the Financial Times in the UK, Het Financieele Dagblad in the Netherlands and Il Sole 24 Ore in Italy.

Speaking at Global Events

In line with our objective of increasing global visibility of the association, INREV speakers participated in 26 events hosted by other organisations. These included the NCREIF Winter Conference, ANREV Annual Conference CREFC Europe Conference, EY European Real Estate Workshop, Insurance only roundtable on Solvency II and Business Arena London.

Get the information you want at the right time

We take the security of members’ data very seriously. We updated our policies and procedures to ensure that we were compliant with the European General Data Protection regulation (GDPR) which came into effect in May 2018. We took steps to ensure that members personal data is processed in a way that is fair, lawful and transparent. A full overview of all our actions were made available to members and is published on the INREV website. We also used this opportunity to get members to update their data and preferences so that we can more effectively provide members with the right information at the right time, according to their business needs. These steps will be instrumental as we work towards providing members with more tailored information in the future.

Events

INREV offered a wide variety of events in 2018, including conferences, seminars, breakfast meetings and round table discussions. In total, 24 events were held, attracting 2374 attendees from 332 member companies, compared with 20 events, attracting 2051 attendees from 326 member companies in 2017.

INREV offered three flagship events: Annual Conference in April, Young Professionals Conference in July and the Autumn Conference in November.

INREV Annual Conference

The thirteenth Annual Conference was held in the Irish Capital of Dublin, attended by over 448 attendees who gathered to discuss and deliberate over the theme of, ‘Finding Value in Late Cycle Investing’. We covered global economics, global politics, mega trends and with Ireland as the host, Brexit was also high on the agenda.

Dr Michael Heise, Chief Economist, Allianz started off by presenting the economic cycle in a novel way; ‘If midnight is the end, the world real estate economy is at 22:45. Joska Fischer, Former German Minister of Foreign Affairs kept the audience on the edge of their seats as he addressed the topic of ‘Uniting a changing Europe’.

Danny McCoy, CEO at Ibec presented the view from Dublin for local flavor followed by Claire Penny from Watson IoT for Buildings at IBM presented her view on ‘Innovation and data’ in real estate. As part of the interactive session, the audience were polled on if their new buildings now have intelligent systems, with just 6% voting ‘true’, 48% ‘not true’ and 46% ‘partially agreeing’ leading Claire to stress that technology can enable the optimisation of space, building and the provision of services but that technology is not the silver bullet; rather a tool to help deliver.

The two days of debate, discussion and fruitful networking was rounded off with food for thought by Tim Harford, The Undercover Economist who took attendees on a colorful journey to understand wishful thinking, motivated reasoning and how we could try to be aware of it in our decision making citing a few tips such as understanding emotional response, maintaining a spirit of curiosity and listening to rational debates to illustrate his message.

INREV Autumn Conference

Over 176 delegates, from 16 countries, gathered in Madrid, to attend the third INREV Autumn Conference. This fully booked flagship event welcomed around three quarters of delegates who were attending for the first time with the event targeting mid-to senior level management attendees such as Head of Fund Management, Heads of Portfolio Management, Directors and Senior Managers. The theme, ‘Embracing the alternatives: future proofing the real estate industry’ was the overarching theme moderated by Gabi Stein, Managing Director, Equity Capital Markets, Tishman Speyer and Matthew Ryall, Senior Consultant, Accord Group. Continuing the trend of firsts, INREV launched its event app at the Autumn Conference, with a good uptake and many attendees interacting with the speakers and asking questions via the app. The Conference was opened by Didier Sornette from ETH Zurich as he took attendees back to the 80s in his presentation on how to predict the next financial crisis. Technology and the sharing economy was discussed by Märtha Rehnberg, Co-Founder and Partner at DareDisrupt who explained that to future proof ourselves, we need to understand that disruption is not something that we can forecast but rather something that can be imagined and created. It is not what technology can do for you but what you can do for technology. The conference was rounded off by Alexis Crow from PwC who talked to the audience about the impact of trade wars on the global economy.

INREV Young Professionals Conference

The 11th edition of the Young Professionals Conference was held in Budapest between 5 and 6 July and attended by 168 delegates. Technology and data were key themes throughout, with keynotes, panels and insightful discussions on this all-important topic, delivered by some of the most cutting-edge thought leaders in the industry. Iryna Pylypchuk of Fidelity International and Peter Hayes of PGIM Real Estate moderated the two-day event which highlighted indicators of how the industry is changing. In looking beyond resilience and actively embracing this change, speakers such as Philip Coggan, Bartleby columnist at the Economist, Gustaf Lilliehöök, Partner at NREP and Dan Hughes, Co-Founder of Liquid Real Estate Innovation all shared their views. The education programme was complemented by site visits to local projects to add a practical flavour to this conference.

Investment Intentions Roadshow 2018

INREV kicked off 2018 with a series of local events to launch the results of our annual Investment Intentions Survey, which reviews prospects and trends for non-listed real estate. Almost, 600 attendees joined us in six different cities across Europe, starting in Amsterdam and Munich, followed by Stockholm, Helsinki and Paris and Zurich.

North American Conference

In September, INREV hosted the sixth North American Conference in New York. The event, which attracted almost 90 senior professionals, featured European and US experts who delivered insights on the latest trends in investing in European non-listed real estate, including a comparison of growth opportunities in Europe and the US and an update on political and economic developments around the theme of Brexit.

Advanced Tax Roundtable

The Advanced Tax Roundtable held on October in London welcomed 50 senior tax experts to lead a discussion on the changing tax climate in Europe and the US and look to how fund structuring has shaped as a result. The roundtable also addressed investor strategy for managing tax-related risk.

Finance Operations and Technology Round Table

Following on from the Advanced Tax Round Table, we brought together and hosted around 75 senior reporting and finance specialists for a full day event in London to discuss how innovation and technology will affect investment managers in how to make better informed decisions and to collect data more efficiently. The event was opened by Kenneth Cukier, Senior Editor at the Economist who spoke about building an innovation ready company.

Additional Events in 2018

• Erwin Stouthamer Memorial, February 2018, Amsterdam – 67 participants
• DDQ Round Table, February 2018, Amsterdam – 27 participants
• DDQ Round Table, February 2018, London – 51 participants
• Nick Tyrrell, March 2018, London – 28 INREV member participants
• Cannes Seminar, March 2018, Cannes – 224 participants
• AGM, April 2018, Dublin – 112 participants
• German Vehicles Index Launch, June 2018, Frankfurt – 40 participants
• Global Standards Event, September 2019, New York – 60 participants
• EXPO REAL Breakfast, October 2019, Munich – 143 INREV member participants
• INREV/ IPF/ ERES Join Research Round Table, November 2018, Amsterdam – 15 INREV member participants