Two thirds of Europe's listed real estate companies by market capitalisation in the EPRA Index have received Gold Awards for the quality of their financial reporting.
The awards were determined following an analysis by Deloitte Real Estate of how the companies' 2015 annual reports measured up to the Best Practice Recommendations (BPR) as drawn up by the European Public Real Estate Association (EPRA).
Some 46 EPRA BPR Gold Awards were granted this year versus 33 in 2015, while there were 21 Silver and 9 Bronze Awards (2015: 18 and 9). The Gold Awards recognise companies for the highest levels of compliance to the BPR recommendations, and the results were announced at EPRA's annual conference in Paris on Wednesday.
Philip Charls, EPRA CEO, said: 'Raising the quality of financial reporting in the European listed real estate industry by improving the level of compliance with the EPRA BPRs is a top priority. So this is a fantastic result. It means investors and financers are getting much better transparency and comparability than previously when assessing the performance of companies.
'Thanks to the strong push by the EPRA Reporting and Accounting Committee we have hit the bull’s-eye. We attained our targets for increasing the number of companies receiving BPR Awards generally and for those climbing to the pinnacle of best practice by reaching the Gold Standard. The message that you cannot be a top listed real estate player, and be viewed as having the best professional management, without delivering compliance with these industry benchmarks has obviously hit home in the market.'
Key performance indicators
The scoring that determines the level of Awards granted reflects the emphasis the BPRs place on six key performance measures: EPRA Earnings; NAV (net asset value); NNNAV (triple net asset value); Initial Yields; Vacancy Rates and Cost Ratios; as well as on a series of general recommendations.
The most widely utilised metric in European listed real estate corporate reporting is EPRA NAV, with EPS (earnings per share) and NNNAV following closely behind. Net Initial Yields and Vacancy Rates come next, while Cost Ratios have just surpassed the 50% threshold for reporting by companies.
Impressive rises in disclosure have been seen in the individual metrics over the past year among firms in the Europe Index: The number of companies disclosing EPRA EPS was 81% (+14% on the 2015 survey) of which 76% included a full reconciliation to IFRS earnings. Some 97% of firms now report EPRA NAV, compared with 88% last year. Disclosure of EPRA NNNAV reached 72% (+9%) and 53% of these companies are now presenting either one or two of the EPRA cost ratios.
Emmanuel Proudhon, director at Deloitte France said: 'The growth in compliance with the EPRA BPRs continues to gain momentum and we've seen steady advances over the last few years. There are also an expanding number of companies achieving the highest standard of a Gold Award. No other listed real estate market globally has such a comprehensive performance assessment framework and the European companies are clearly further raising their game to compete for capital with other markets and equity sectors.'
EPRA has more than 220 members, covering the spectrum of the listed real estate industry, from companies to investors and their suppliers. The Brussels-based organisation represents over €365 bn of real estate assets and 93% of the market capitalisation of the FTSE EPRA/NAREIT Europe Index.
