Property valuations, to a large extent, drive vehicle performance and Net Asset Value (NAV). Management and performance fees are also often directly or indirectly linked to property valuations. From an investor’s perspective it is therefore important to receive information from a vehicle which is based on a consistent and transparent approach to underlying property valuations. Other stakeholders including analysts, lending banks and market participants may also have an interest in valuations being prepared on this basis.
The aim of these guidelines is to define a common approach to property valuations that can be used for performance measurement, vehicle valuation and reporting.
The valuation guidelines should be seen as a minimum requirement from an investor’s perspective. Because investor requirements for property valuations do not generally differ between the various types of vehicle, no differentiation has been made in the best practice for open end or closed end vehicles. This means, for example, that the frequency of external property valuations for reporting purposes does not necessarily depend on the nature or type of the vehicle.
These best practice requirements are not aimed at giving recommendations or guidance regarding property valuations for unit pricing purposes.
The principles and guidelines for property valuation are listed below. Where appropriate, further explanation is provided to assist your understanding.