Expense ratio cost classification
Fees and costs should be classified consistently for the purpose of calculating the INREV fee and expense metrics. Fees and costs included in TGER are categorised according to the respective nature of the underlying services. To the extent that the fee is charged for a service provided by the manager in lieu of a service provided by a third party, and is charged in addition to the fund management fee, or is otherwise disclosed separately from the fund management fee, it should be classified according to the nature of the service rather than whether the service is provided by the investment management or third party.
Vehicle fees included in the TGER comprise of:
A. Ongoing management fees and transaction-based management fees:
- Asset management fees;
- Fund management fees;
- Wind-up fees;
- Debt arrangement fees;
- Commitment fees;
- Subscriptions fees;
- Redemption fees;
- Property acquisition fees amortization of the year;
- Property disposition fees;
- Project management fees.
Where a single fee is charged to cover a variety of activities, the constituent elements will need to be identified, allocated to their appropriate category and disclosed appropriately.
B. Performance fees:
- Performance fees;
- Incentives and promotes;
- Carried interest;
- Other performance fees.
Fee reductions, fee waivers, and transaction offsets recognised in the financial statements of the vehicle, should be disclosed as part of the ongoing investor reporting, and included in TGER. Existence of fee rebates should be disclosed if permitted under the provisions of the vehicle documents. Fee reductions, fee waivers, and transaction offsets not recognised in the financial statements of the vehicle are excluded from the TGER and may be disclosed if permitted.
- Audit costs;
- Bank charges;
- Custodian costs;
- Dead deal costs;
- Debt arrangement costs;
- Other/miscellaneous vehicle costs;
- Professional service costs (incl. valuation costs and vehicle formation costs (amortisation for the period));
- Placement agent costs;
- Staff costs (if applicable);
- Transfer agent costs;
- Vehicle administration costs;
The costs incurred by Special Purpose Vehicles (“SPVs”), which sit above the acquisition structure in the holding structure, are included in vehicle expenses. Costs of this nature that are charged to the acquisition vehicle should also be included in this category.
Property fees included in the REER are directly attributable to the management and the maintenance of specific properties. These fees comprise:
- Asset management fees (certain services not included in the TGER);
- Internal leasing commissions;
- Property management fees;
- Development fees.
Property costs included in the REER are directly attributable to the management and the maintenance of specific properties. These costs comprise:
- External leasing commissions;
- Property acquisition costs (amortisation for the period);
- Other/miscellaneous/sundry costs;
- Property insurance costs;
- Property management costs;
- Repairs and maintenance costs;
- Taxes on property-related activities;
- Utilities costs (non-rechargeable portion).
Fees and costs excluded from the TGER and REER comprise:
- Deferred taxes on property-related activities
- Development costs;
- Disposition costs;
- Fair value adjustments;
- Gain/loss on currency exchange rates;
- Gain/loss on investment disposition;
- Goodwill write-off;
- Impairment of goodwill;
- Losses on disposal of subsidiaries;
- Payments related to financial derivatives;
- Provisions and allowances;
- Receivables write-off costs;
- Rent free/discounts;
- Securities handling charges;
- Share of losses of associates and joint ventures;
- Taxes on real estate transactions;
- Unwinding of discounts and effect of changes in discount rate on provisions.