Striding towards global fee and expense metrics

Bridging the gaps between regional standards

INREV, ANREV, NCREIF and PREA have been collaborating since 2015 on the challenge of developing a set of global fee and expense metrics. We reached a key milestone along this road in May, with the publication of a global terminology and set of definitions, bridging the gaps between different regional standards.


One of the aims of the global standardisation project is to align cost and fee metrics for non-listed vehicles around the world and make it possible to provide consistent information across funds, managers and regions. John Caruso, Co-Chair of the Global Standards Steering Committee and Senior Director at TIAA, explains that ‘the goal of our collaboration is to converge information reported to real estate investors wherever we can, or, at a minimum, build bridges to navigate through differences. In this way we can facilitate global decision-making by investors.’

The goal is to converge information reported to real estate investors wherever we can. John Caruso

INREV has been a leader in improving European guidelines for fee and expense metrics over the last 10 years. These guidelines were also made available for ANREV members in Asia through a licence agreement. Yet investors still experience challenges when comparing what they pay for vehicle services, particularly across borders. While most non-listed vehicles around the world have similar business structures, the language they use to describe their activities can vary greatly. These language differences are one of the hurdles that the global taskforce has worked hard to overcome in establishing a common terminology and set of expense ratio definitions.


In July, these results were incorporated into a newly updated INREV Fee and Expense Metrics module – which now provides more transparency on the fee and cost components of expense ratios, as well as linking them to other INREV modules.

While updating the module, INREV focused on making it more practical and user-friendly, in particular by including sample calculations. We also generated a detailed list of fees and costs that managers should account for when calculating TER and REER. It is now possible to use these fee and cost items in combination with INREV NAV and GAV to produce more transparent expense ratios.

One of the challenges that managers face is to make sure investors understand the fee arrangements that are in place and the expense ratios they provide, as a vehicle’s operating model is likely to have a big effect on its cost structure. For instance, the extent to which the manager uses third-party service providers may have a significant impact on cost levels. Cost ratios should give greater insight on these sorts of issues if they are to be really useful to investors.

The upgrade of the INREV Guidelines is a great step forward for finance teams. Renaud Breyer

Renaud Breyer, Executive Director at EY and Co-Chair of the Fee and Expense Metrics task force, stressed the importance of these improvements: ‘The upgrade of the INREV Guidelines is a great step forward for finance teams. The aim of the convergence is to make the best of both worlds and address the challenges that finance teams face when applying various industry guidelines.’


Now that Phase One of the global fee and expense metrics standardisation project is complete, the second phase is coming hard on its heels. Running from mid-2016 to mid- 2017, the aim of Phase Two is to define a globally consistent set of metrics that can be used to compare vehicle fees and costs anywhere in the world.

The global standardisation of vehicle fee and expense metrics will benefit investors and managers alike, by helping investors to optimise their allocations and managers to understand the market for their services better. But in moving towards this goal, INREV understands that changes need to be practical – it’s important to ensure that the improved guidelines don’t come at the cost of a greater administrative burden in vehicle reporting. Ultimately, however, consistent reporting of fees and costs should enhance confidence in the non-listed sector and further fuel real estate investment globally.

Offering practical and useful guidelines is at the core of what INREV does. Our ultimate goal is to develop one set of global standards for the real estate industry which can be applied by all market participants in every corner of the globe.

For further information contact Constantin Sorlescu, Professional Standards Manager at