EUROPE - New guidelines have been published which are expected to increase the transparency of management fees for private property funds.

Guidelines, published by the European Association for Investors in Non-Listed Real Estate Vehicles (INREV), are designed to facilitate comparisons between fund managers as they now measure total expense ratio (TER) - annual operating costs as a proportion of assets - along with the real estate expense ratio - which measures fund-level expenses and other property-specific costs - and ‘leakage' from the gross internal rate of return.

These new metrics are the result of a two-year project based on fund managers' record of less-than-total transparency for unlisted property funds compared with other asset classes.

That said, INREV director of professional standards Berend Scholten acknowledged there are no penalties for non-disclosure.

"Our job is to promote the guidelines and try to convince members to apply them," he said.

"We hope they'll help the industry to create a higher level of transparency. It should help to develop the market in a professional way, in line with INREV's goals."

Although the impetus for the guidelines came from pension funds, fund managers "will get used to it", he added.

"It gives them a more uniform way of disclosing fees. It should be of benefit to both groups."

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