CREATING AN ASSET LEVEL INDEX Commi mitme tment nt reques est presen entat tation ion May 2017 INREV Team
Meet the INREV team Matthias Thomas Henri Vuong Vitaliy Tonenchuk Chief Executive Officer Director of Research & Senior Research & Analytics xxxxxxx Market Information Manager Matthias.Thomas@inrev.org Henri.Vuong@inrev.org Vitaliy.Tonenchuk@inrev.org 2
Agenda • Project scope • Key deliverables • Timeline • Commitment request • Data delivery and validation 3
The Project: Asset Level Index Asset Level Index ____ Project scope To produce a set of To create an online indices that measure To explore the analysis tool that allows the performance of real feasibility of asset to members to create their estate assets across fund level reconciliation own customised indices Europe With the potential to expand to global through collaboration with NCREIF and ANREV 4
Responding to direct request Member Request ___ In response to direct requests from, and a need within, the real estate industry for additional analysis tools that help to explain the drivers of fund performance INREV has begun to test the concept and viability of developing an asset level performance index Proof of Concept ___ The process to evaluate the feasibility of the project and key items, such as data delivery, calculation and methodology is already underway Focus Group ___ Working in conjunction with a focus group of around 30 INREV members across 21 different member companies and NCREIF 5
Members actively working in focus groups Data fields and definitions Data delivery Governance template Focus Performance Technology calculation Groups methodology Validation, Asset to fund quality level control and reconciliation processes Visualisation, design and reporting INREV members and NCREIF contribute their knowledge, expertise and provide governance for the project 6
Key deliverables Snapshot Report Quarterly Report Asset Level Index Publication Publication Analysis Tool Members and non-members INREV Members only Data contributors only Key deliverables: reports and an online analysis tool 7
Snapshot report – available to everyone To be published 10 weeks after quarter end Available to members and non-members 8 Note: This is a mock up for illustrative purposes only
Full report – available to members only To be published 10 weeks after quarter end Available only to INREV members 9 Note: This is a mock up for illustrative purposes only
Index Analysis Tool – for data contributors Online tool with instant Create own customised Ability to compare own access Indices assets with Index ___ ___ ___ Valuation Selections by: Country Sector approach Geographic Results shown by: Asset type Asset lifecycle location Save selection Export to Excel Export to PDF Note: Illustrates only some of the proposed features 10 Investors without a direct portfolio are expected to encourage their managers to contribute data to the initiative
Index Analysis Tool selections Create customised indices based on the following selection criteria Geography: Asset type: Asset life cycle: Ownership type: • • • • Country Offices Development Investor • • • • City Retail Initial leasing Fund manager, etc • • • Region, etc Residential, etc Operating, etc Owner occupied: Asset size by value: Valuation standard: Appraisal type: • • • • Yes <1 mln RICS External full • • • • No 1-5 mln ImmoWertV External desktop • • • >50 mln, etc Other m-to-m, etc Internal, etc Valuation basis: Accounting standard: Occupancy rate: Vehicle type: • • • • Cost IFRS <50% Club deal • • • • Market value US GAAP >50% Fund, • • • Dutch GAAP, etc 80-100%, etc JV, etc 11
Descriptive Statistics from Analysis Tool Get detailed description statistics for any selection of assets Returns: Number of assets Quartiles Value of assets • Total return • Income return • Capital return Total and average Composition by Average occupancy Weighted average gross/net leasable geographic location rate unexpired lease term area Composition by: Composition by: • Composition by asset Composition by asset Valuation basis • Accounting standard • lifecycle type Valuation standard • Accounting basis • Appraisal type 12
Analytical tool online anytime anywhere Make selections to create a customised Index Instant results will appear on screen More features to be added in the final version Download detailed information in PDF or EXCEL format 13 Note: This is a mock up for illustrative purposes only
Geographic visualisation of results Switch between page views: SELECT NUTS LEVEL Charts, statistics, etc Switch between NUTS0, NUTS1, NUTS2, etc Mapped visual of assets Exact locations and names will NOT be revealed 14 Note: This is a mock up for illustrative purposes only
Additional options specific to your portfolio Exclude own assets Compare own assets Performance of own assets Show location of own assets Save selection More analysis options will be implemented based on members‘ request and are highly dependent on the quality and completeness of data submissions 15
Staged process to index production Call for data 2 weeks after quarter end Member data delivery and validation Up to 8 weeks after quarter end INREV validation Up to 9 weeks after quarter end Publication of all reports and update of Online Analysis tool 10 weeks after quarter end 10 week process to publish the Asset Level Index 16
Goal to launch with EUR 100 billion INREV Asset Level Index projected coverage 350 300 250 EUR bn 200 150 100 50 0 2017 2018 2019 2020 2021 17 * Estimated from the size of the INREV Quarterly Index
INREV needs you 3 years of 3 years of EUR 10,000 historical quarterly initial quarterly data going investment data forwards Member support is fundamental to the success of this project 18
Founding member benefits Initial 5 Years after > 5 Years Investment launch Founding member EUR 10,000 EUR 1,250 p.a. EUR 5,000 p.a. Non-founding, data contributing EUR 5,000 p.a. EUR 5,000 p.a. member Non-founding, non-data EUR 15,000 p.a. EUR 15,000 p.a. contributing investor* member Non-member Membership + other Membership + other conditions above conditions above 19 * Investor member without direct real estate portfolio
Access to information Snapshot Full Report Index Analysis Tool Founding member Yes Yes Yes Non-founding, data contributing Yes Yes Yes member Non-founding, non-data Yes Yes No contributing fund manager member Non-founding, non-data Yes Yes Yes contributing investor member Non-member Yes No No 20
Staged data delivery schedule 100% of real estate assets for specified vehicles 1 Nov 2017 100% of real estate assets for specified vehicles 1 Mar 2018 Use best efforts to provide data for the remaining real estate assets 31 Dec 2019 100% of real estate AUM Use best efforts to provide data for all assets 21
Easy data delivery and validation Automated data Structured data upload and INREV validation delivery template validation by and verification in Excel members via an online tool Step 1 Step 2 Step 3 Continuous support from the INREV team 22
3 – step process to ensure quality & integrity Data auto End Start Tool sends validated? Data is request to Tool processed in Yes INREV Fund validates database and Tool Manager/ data performance is calculated Investor No Yes Fund Fund Fund Fund Manager Manager Manager Manager receives Vehicle logs into signs off enters data error Input Tool performance in Input Tool message No Index Index manager manager INREV receives does final Index message validation manager 23
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