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Summary of Survey Results
The Debt Valuation Task Force has completed its Plan Sponsor and Investment Manager surveys and presented its conclusions and recommendations to the REIS Council at its November 19, 2008 meeting. A total of 32 management firms were interviewed including 18 of the top 20 firms (by assets under management per Pensions and Investments). The Task Force also completed 24 plan sponsor interviews, representing over $1.8 trillion in total plan assets. There is agreement that all open-end funds should fair value their debt (because of trading) but disagreement about the valuation of debt in closed-end funds and single investor investment accounts. The Task Force suggested to the REIS Council that the requirement for debt valuation for these funds be changed to a recommendation, but that all funds are required to provide enhanced disclosures on debt valuation so investors receive the fair value information they either require or desire. Before acting upon the Task Force recommendation, the REIS Council asked the Task Force to assess interviewee sentiment to its proposal via an additional survey. These findings, reported to the REIS Council during its December 17, 2008 meeting indicated that although the Industry agreed with the recommendations of the Task Force, they require further guidance on the topic before immediately proposing a change to the REIS Standard. Based on this information, the REIS Council formed a Task Force to address the guidance issue. Guidance is expected during quarter 2, 2009.
Guidance Update
During the recent NCREIF and PREA conferences the Debt Valuation Guidance Task Force presented its preliminary findings. The task force is recommending a holistic approach to financial statement valuation, requiring fair value consideration of all financial statement elements. There are two principle divers of the valuation process: market participant behavior and the value of the invested dollar. Preliminarily, the task force has concluded that the value of secured debt in certain circumstances may be par value, however an analysis must be prepared to support that valuation.
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The REIS Council will generally hold monthly teleconferences at noon Eastern on the third Wednesday of every month. Calls are expect to be limited to one hour. For the fiscal year November 1, 2008 through October 31, 2009, the Council will meet at the PREA conference in March, 2009 and at the NCREIF conferences in June and October 2009 rather than by teleconference. Click here for the schedule.
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The REIS Board is an established body which serves as the official governing body of REIS and provides leadership and expertise in establishing REIS as the authoritative and verifiable information and reporting standards for the U.S. institutional private real estate equity investment industry. It is expected that the REIS Council will be an important initiator of real estate information standards that may be considered and approved by the REIS Board.
TThe REIS Council is an established body selected and appointed by the REIS Board through an open nomination process. Council members are subject matter experts within their respective professional disciplines and possess knowledge and understanding across disciplines. Council members are also active participants in at least one sponsoring organization's committees/activities. The Council is responsible for maintaining transparency and open involvement in the REIS Standards process and serves as the primary link to the Foundational Standards' sponsor organizations.
The REIS Constitution establishes the governance upon which REIS will be maintained, including additions, modifications, clarifications and deletions to REIS. Click here for the Constitution.
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