Property valuations

These valuation guidelines aim to provide a common approach to property valuation, to achieve a consistent and transparent approach to asset valuation and reporting.

 

A - Minimum compliance

  1. Property valuations should be undertaken by professionally qualified independent valuers, with transparent investor reporting.
  2. Fund documentation should include valuation methodology, including frequency of valuation
  3. The valuer appointment should be regularly reviewed, at least every 3 years; such review to consider implementation of the RICS valuer rotation guidelines.
  4. Record keeping is key to auditing the independence of the valuer and the valuation process. Records should be retained of all correspondence between the valuer and the manager, all valuation changes should be recorded together with a rationale/explanation for the change.
  5. In preparation for the valuation the manager should supply to the valuer comprehensive and transparent information to enable the valuer to come to their opinion of value.
  6. The valuer should comply with the relevant professional valuation standards and the accounting standards adopted by the fund and inform the manager of the implications of any changes.
  7. Disclosures should include a statement outlining:

    a. The methodology used to value the property and other investments of the fund.
    b. Where applicable, a statement that the basis for valuing a particular investment has changed since the previous periodic statement and the reasons why.
    c. The frequency of valuations.
    d. Where investments are shown in a currency other than the usual one used for valuation of the portfolio of the fund, the relevant currency exchange rates must be shown.
    e. All valuations shall be carried out on a “Fair Value” basis as defined in the RICS Appraisal and Valuation Manual (Red Book).  Any valuations undertaken internally or not independently should be clearly highlighted, with reasons why.
    f. Who appoints the valuer and to whom the valuer reports/has its fiduciary duty.

 

B - Best practice

  1. All property investments should be valued at least quarterly.
  2. All investments must be valued on the same date, or on the best available date.  The valuation of any assets and dates of the valuations of any assets valued, other than on the same date as the rest of the portfolio, should be disclosed.