The European association of non-listed real estate vehicles (INREV) has launched the first pan-European corporate governance framework for private real estate funds.

The European association of non-listed real estate vehicles (INREV) has launched the first pan-European corporate governance framework for private real estate funds.

'Real estate is one of the last great bastions of entrepreneurship and is one of the most opaque markets, particularly with regard to the underlying property, and with respect to the fund vehicles,' said Tommy Brown, a member of INREV's corporate governance committee.

He said that as a result of the lack of transparency, there has traditionally been a lack of consistency in how fund vehicles have worked. 'Corporate governance guidelines aren't fixed and they vary widely from country to country. They also vary widely between transactions and forms of fund,' he said.

Having grappled with many different corporate governance systems in place across the EU to identify common theme, INREV has drawn up a framework document, that can be summarised in seven principles. These are:

1. The Law - The fund should always comply with the relevant legislation and regulations applicable in the jurisdiction in which it is established
2. The Constitutional Terms - The fund's constitutional terms should articulate the key corporate governance principles and should always be applied
3. Skill, Care, Diligence and Integrity - Managers, non-executive officers and investors should manage funds, the protection of investors’ interests and their investments, with due skill, care, diligence and integrity, and should ensure adequate levels of human, financial and operational resources
4. Accountability - Managers, non-executive officers and investors should always be accountable for their actions
5. Transparency - Adequate information relating to the fund should be communicated to all relevant parties in a way which is clear, fair, complete, timely and not misleading
6. Acting in investors’ and the fund's interests, including alignment of interests and conflicts of interest - Funds should be run in the interests of investors. Where they arise, conflicts of interest should be managed fairly between investors, funds and managers, the alignment of interests between investors and managers can reduce the risks of such conflicts
7. Confidentiality - Information regarding funds and investors’ interests in funds which is not publicly available should always be treated confidentially.

INREV, a non-profit association based in Amsterdam, was launched in May 2003 to act for investors and other participants in the growing non-listed real estate vehicles sector. The organisation has over 200 members, 50 of whom are investors with over EUR 100 bn in real estate property assets under management.

Click on the link below to go to the INREV website