Since the start of this year, the Total Global Expense Ratio (TGER) has been required data for all those using the INREV Guidelines. This means that TGER disclosures should be provided for all reporting periods ending on or after 31 December 2020.
The TGER, which provides a consistent measure of the fee and cost load of non-listed real estate investment vehicles across regions, is set to bring a new dimension of transparency and comparability to expense levels globally. The measure is the outcome of close collaboration between four regional bodies – INREV, NCREIF, PREA and ANREV – and makes it possible to compare fees and expenses across vehicles from different global regions for the first time.
The TGER, which provides a consistent measure of the fee and cost load of non-listed real estate investment vehicles across regions, is set to bring a new dimension of transparency and comparability to expense levels globally
Many members are most likely already be aware of the TGER. After its launch in early 2020, INREV allowed for a transition period when members could gradually adopt the measure while phasing out the previous INREV Total Expense Ratio (TER), which was developed for the European market. Like the TER, the TGER will help to bring clarity to investor communications and consistency when comparing vehicle fees and costs. The TGER will help boost transparency from the vehicle level up to the widest market perspective, for example via the disclosure tables and aggregated global averages that INREV provides to members as part of its Management Fees and Terms study.
With investors’ real estate strategies becoming more and more global in scope, it’s vital that they are able to compare the fees and costs of any vehicle they are thinking of buying into, whatever its region of domicile.
Renaud Breyer, who as chair of the INREV Reporting Committee has been strongly involved in developing the Total Global Expense Ratio, wants to encourage all those vehicle managers who haven’t yet made their submissions for the TGER to do so as soon as possible. ‘The TGER is a great tool to support managers in demonstrating how efficient they are at setting up and managing the structures they have put in place for investing in real estate,’ he says. ‘Not only will it give more transparency, but it will also provide a more universal approach in reporting the cost load of a fund.’
The TGER is a great tool to support managers in demonstrating how efficient they are at setting up and managing the structures they have put in place for investing in real estate
Given that many INREV members have already started to provide the TGER data, investors in European vehicles are also starting to see this information as a must-have, not just a like-to-have. As it gains traction globally, the TGER will become an important component in an investor’s due diligence, with funds unable to provide it likely to be viewed as less transparent than vehicles where it is available, other things being equal. For the relatively small amount of extra work that managers will need to get them from the requirements of the existing TER to TGER , this should prove to be effort well spent. Once transitioned, TGER is no more time consuming or complicated to prepare than TER.
During the period of transition between TER and TGER, many members asked INREV about the differences between the two measures and what they need to do next. Based on these, several FAQs have now been included at the end of the Fee and Expense Metrics module of the INREV Guidelines. Practical examples are also available here.
For any other questions please contact Constantin Sorlescu.