New performance index will boost industry transparency and improve peer-to-peer comparison. New pan-European open end fund index also launched.
03 April, Venice – The first pan-European quarterly Asset Level Index was launched today at the INREV Annual Conference. Hugely anticipated by the industry, the index already covers over 7,000 assets with a total AUM of over €150 billion, with the potential to become much larger and to provide even greater depth of insight.
The new index responds to an industry-wide requirement for a reliable and independently-managed asset performance indicator to track real estate market performance on an asset level across Europe, with greater granularity and consistency.
Based on five years of historical quarterly data, the new consultation index delivers data sets of pure real estate performance. Stripped of leverage and financial structuring, it provides a deeper understanding of drivers of real estate performance and risk. This will facilitate improved peer-to-peer and cross-border comparability; and enhance decisions about portfolio allocation and risk management. The index will also help to reduce information asymmetry between investors and asset managers and improve alignment of interest. Over time, it has the potential to link fund and asset-level data, providing hitherto unavailable performance attribution and reconciliation analysis.
The launch of the index comes at a key time for the industry, when institutional investors are increasingly focused on gaining access to more forensic data enabling them to make better informed investment decisions.
Following the industry’s initial request, INREV led the initiative to develop the index in full collaboration with 32 founding members. The launch of the index marks the culmination of an intensive three-year exercise by this dedicated group.
Commenting on the launch, Lonneke Löwik, INREV’s CEO, said: ‘The Asset Level Index is a game changer for the non-listed real estate industry. It has already received huge support, but the ambition is for the index to grow significantly and rapidly – we believe it could represent total AUM of around €500 billion within five years. The larger it becomes, the greater the benefit it will provide in terms of the quality and breadth of data which, in turn, could play a significant role in helping to unlock increased capital inflows into non-listed real estate. The index also has the potential to become global, enhancing overall transparency of the industry.’
Matthias Pilz, Head of Investment Strategy & Investor Relations at Allianz Real Estate commented: ‘The key benefits of the index will be transparency, comparability and consistency. By making headline data publicly available, it will contribute to the globalisation of standards and help to drive the cost of transparency down, which is a key factor in the development of the real estate industry.’
Nick Blakemore, Director Portfolio Analysis, M&G Real Estate and Chair of the INREV Asset Level Focus Group, added: ‘The index will help in terms of assessing diversification strategy – the purity and richness of the data will help to provide a more complete and comprehensive view of the real estate market overall, compared to other asset classes. It’s brand new: new attribution, new analysis.’
Separately, INREV has also announced the launch of the INREV European Open End Diversified Core Equity (ODCE) Fund Index – the first pan-European performance index focused on this major group of funds. The index covers all 12 funds in this category in Europe, with a combined AUM of €24 billion at end 2018. It plugs an important gap for global institutional investors for whom data on these funds in the US and Asia Pacific, is already available. Like the Asset Level Index, the INREV European ODCE Fund Index adds significantly to overall levels of transparency in the non-listed real estate industry. Importantly, this group of funds is likely to be the first where the potential of the Asset Level Index to link asset and fund level attribution, is realised in the future.
The Asset Level Index and the INREV European ODCE Fund Index are the latest additions to INREV’s existing suite of regular indices.
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Notes to Editors
About the Asset Level Index
The INREV Asset Level Index is a new quarterly pan-European index measuring real estate market performance on an asset level across Europe. This initial ‘consultation’ index is based on five years of historical quarterly data representing a total AUM of around €150 billion and covering over 7,000 assets across all the main commercial real estate sectors and countries.
Data has been captured from 32 founding participants – 29 asset managers and three institutional investors – who are all INREV members.
The INREV Asset Level Index is supported by a custom-made automated validation system for contributors and a specific analysis tool to enhance data interpretation.
About the INREV European Open End Diversified Core Equity (ODCE) Fund Index
The INREV European ODCE Fund Index is a new quarterly pan-European index measuring the performance of open end core funds with a strategy to invest across Europe and across multiple sectors. This initial ‘consultation’ index is based on historical quarterly data from Q3 2011 representing total gross asset value of around €24 billion as at end 2018.
Funds must comply with strict eligibility criteria for four consecutive quarters in a row in order to be included in the index.
About INREV indices
INREV publishes a suite of performance indices providing accurate, comprehensive data on all aspects of the non-listed real estate industry. The current suite comprises 10 indices. The two latest additions are the Asset Level Index and the INREV European ODCE Fund Index. The other indices are the: INREV Annual Index, INREV Quarterly Index, German Vehicles Index (annual and quarterly), Global Investor Index, Global Real Estate Funds Index and the IRR Index (annual and quarterly).
INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, was launched in May 2003 as a forum for investors and other participants in the growing non-listed real estate vehicles sector. The association represents and reflects an industry with a total value of €2.7 trillion and INREV members deliver €385 billion of stimulus to the real economy of Europe.
INREV has 456 members which include 82 of the largest institutional investors as well as 40 of the 50 largest real estate fund managers, plus banks and advisors across Europe and elsewhere.
The non-profit association is focused on increasing the transparency and accessibility of non-listed vehicles, promoting professionalism and best practice, and sharing knowledge. It is based in Amsterdam, the Netherlands.