Bridging the fee transparency gap

Gearing up for the TGER

Since 2015, global partners INREV, ANREV, PREA and NCREIF have been collaboratively striving to develop a set of global fee and expense metrics, and soon we’re set to mark the advent of a milestone when the Total Global Expense Ratio (TGER) will be available for implementation by the global non-listed real estate industry.

After months of deliberation following the release of an industry consultation paper last year in March, the final version of the globally comparable and consistent measure of fees and costs for real estate investment vehicles is almost ready for launch.

The TGER measures the fee and cost load of a vehicle in a consistent way and for the first time will enable comparison across vehicles on a global level.

Feedback from all regions pointed strongly in favour of TGER’s consistent treatment of services and standardised disclosure notes suggesting an industry that is ready to embrace the evolution towards the global context.

TGER can also be calculated both before and after tax, thereby allowing for a consistent starting point for evaluation and analysis of cost savings due to the tax planning. The adoption of TGER is a natural step forward and will mean increased transparency and heightened comparability, which as the industry moves increasingly toward cross border investments and growing global capital flows, the TGER is a welcome step in the right direction.

When looking at what the TGER means for Europe, Andrew Muscat, COO and CFO at LaSalle Global Partner Solutions explains, ‘The arrival of the Total Global Expense Ratio is particularly welcome in Europe as this is a natural progression from what we’re currently using with the INREV Total Expense Ratio. This is just the next step and it’s a step in the right direction.’

Upon review of the journey to TGER, Barbara Flusk, Head of Real Assets Fund Services at Citco Fund Services tells IQ, ‘This is the first pure global initiative with regard to industry bodies collectively working toward a set of global standards for fee metrics, and we can be very proud of that. While TER is a mandatory metric in Europe and Asia, it remains recommended under REFER in the US. With this collaboration from the various industry bodies, progress is being made in not only educating the global industry, but it is also a great kickstart for other global initiatives going forward.’

In terms of implementation on a global level, TGER is expected to be incorporated within the INREV Guidelines and the NCREIF PREA Reporting Standards from next year and members will be informed in due course on the finer details. Watch this space.

Total Global Expense Ratio Consultation Paper 2018

View the Consultation Paper on the first globally comparable measure of fees and costs named Total Global Expense Ratio (TGER).