Industry bodies INREV in Europe, ANREV in Asia and NCREIF in the US is expected to release a global internal rate of return index later this year.
The associations have seen a growing need for data transparency amid a diversifying investment environment and the aim is to provide an all-rounded review on fund performance, ANREV’s executives told PERE.
The Global IRR index will put together regional IRR data from INREV, ANREV and NCREIF to provide a global benchmark for non-listed real estate funds’ performance.
From the ANREV side, in March 2018 it published its first IRR and Net Investment Multiple Index for Asia-Pacific to analyze the performance of value-add and opportunistic funds. The decision to participate in a global index was driven by the global investing ambitions of Asian and other regional investors. In 2009, there was about approximately $3 billion of inbound capital into Asia-Pacific and around $4 billion of outbound investment. In 2018, inbound capital in the region increased to about $17 billion, while outbound capital reached as much as $60 billion, according to ANREV.
“Investors in each region are all expanding into other regions to seek diversified returns and global asset allocators want to be able to compare the same things in the three regions. We have been having discussions with Asian capital, and they are all very keen to have access to the data,” Alan Dalgleish, chief executive at ANREV told PERE in an exclusive interview to mark ANREV’s 10th anniversary.
Established in 2008, ANREV’s membership has grown from 30 to 210 at the end of 2018. The original rationale was influenced by global investors in the US and Europe, which were keen to understand more about the different markets in the region. These investors were already members of INREV, founded five years before ANREV, according to Dalgleish.
Nicholas Loup, chairman of ANREV, told PERE when a US or European manager wants to set up an Asian product, they need performance data to show their investors but previously there was no benchmark for real estate fund performance in Asia-Pacific.
“The indexes and related attribution allow investors to assess their current or potential investments using actual performance of the competitive set. This transparency allows institutions to invest knowing that the investment can be evaluated on an objective basis,” said Loup. The organisation also provides various reports on data such as investment intentions and management fees on a regular basis.
Despite increasing demand for data transparency, however, getting industry stakeholders to share their data remains an ongoing challenge, according to Loup. To overcome this, and encourage more investors to share information, ANREV has involved some of the region’s prominent institutional investors as decision-makers. Asian state funds GIC and the Korea Investment Corporation and Japan’s Development Bank of Japan, sit on the board of ANREV, for instance.
ANREV has ambitions for an asset-level index, which will collect asset and property-level data, but this is at a nascent stage and undergoing early industry consultation. This will enable managers to conduct better fund analysis and to craft the right portfolios, according to Dalgleish. The industry body is striving to collect more data in Japan. The country, alongside Australia, is considered the region’s most popular investment destinations, according to ANREV’s latest Investment Intention Survey.
“We should not forget that we are often competing for capital in multi-asset portfolios with both equities and bonds, which are very transparent and well-researched markets. As real estate investors, we need to strive to bring our research and analysis close to these public capital market investment alternatives if we want to continue to attract capital to our industry,” said Willem de Geus, co-founder and partner at Proprium Capital Partners, and deputy chairman of ANREV.