A further step towards greater transparency EPRA Annual Report Survey 2019/2020 ContentsDeloitte - EPRA | Annual Report Survey 2019/2020
Foreword 3
1. Scope of the survey 4
2. BPR Awards methodology 4
3. Highlights 5
4. Award winners 6
5. Survey results 8
6. New developments 9
7. EPRA reporting measures 10
8. Award categories 11
9. Participants list 12
“The EPRA Best Practices Recommendations (BPR) Guidelines lie at the heart of the Reporting & Accounting Committee’s mission to improve transparency, comparability, and relevance of financial reporting in our industry. This year’s survey results undoubtedly demonstrate that the industry has largely adopted the BPR, with a truly remarkable increase of companies awarded from 65% in 2015 to 94% this year, on a like-for-like basis. As an industry, we can be particularly proud of this achievement, and I would like to thank EPRA’s Reporting & Accounting team, whose continuous engagement contributed to the BPR becoming a cornerstone of any property company’s financial disclosures. However, at the same time, areas of improvement should always remain at the core of attention. In the forthcoming year, the recently updated new EPRA Net Asset Value metrics (NRV, NTA, NDV) will be surveyed for the first time, while the survey’s revised scoring methodology will be emphasising stricter compliance and enhanced transparency. EPRA, together with its members, will build upon the past years’ success and ensure industry-wide readiness for the upcoming developments by facilitating the adoption process.”
Olivier Elamine, Chairman of the EPRA Reporting & Accounting Committee and CEO of alstria office REIT 2 Deloitte - EPRA | Annual Report Survey 2019/2020 Foreword
Continuously improving quality To instruct property companies in year, 130 companies have earned an assessments these important changes, the EPRA Award, representing 86% by market As announced in 2019, EPRA has Reporting & Accounting team has capitalisation, compared with 124 implemented new Net Asset Value conducted a series of workshops last year. Among these, 86 are Gold metrics in the review of the Best in key European markets as well Award winners, against 80 last year. Practices Recommendations (BPR) as webinars during the first half of This signifies that the BPR initiative Guidelines, and we are pleased 2020, and will continue until the is still steadily expanding and has to see that some EPRA members market fully adopts the new KPIs. kept increasing the focus on the have already started adopting them Again, I would like to warmly thank quality of the reporting despite this Dominique in their financial reporting. These the EPRA Reporting & Accounting troubled year. Moerenhout updates were introduced to align Committee and the finance team EPRA CEO with the evolution of the market for their excellent work and In light of the growing success of the +32 (0) 2 739 1010 and the new real estate landscape commitment in carrying out these Awards, I would like to warmly thank d.moerenhout@epra. that has changed considerably in key updates. Deloitte for their strong support and com the last decade. We are proud that invaluable contribution each year to our BPR continue to serve as the I am truly delighted to share today make this review possible. leading Guidelines for investors and that the number of medals awarded stakeholders assessing the quality has increased by an astounding and comparability of the reporting 117%, with only 60 companies of companies. awarded medals back in 2015. This
A step towards greater with the BPR. On a like-for- FY2019 marks a new milestone for transparency like basis, the percentage of the development of the BPR with: Deloitte and EPRA are pleased awarded companies indeed • the release of three new features to announce the results of our increased to 94% this year of the Net Asset Valuation metrics, Annual Report Survey 2019-2020. compared with 65% in 2015. This replacing EPRA NAV and EPRA This survey comprised a review is a remarkable accomplishment NNNAV and; of 168 Annual Reports from for all those companies, • the amendment of the CAPEX the entire EPRA membership, including their financial teams, schedule. and I congratulate them. This including several non-European We will measure how the industry entities. The aim is to assess demonstrates how useful this has complied with these new Emmanuel Proudhon whether the information required survey was, in both creating requirements next year. Partner by the EPRA Best Practices a challenge and measuring Finally, I would like to thank the Deloitte & Associés Recommendations (BPR), released progress towards wide adoption teams of reviewers at Deloitte from +33 (0) 1 58 37 91 17 in November 2016, has been of the BPR across the industry. across our European real estate [email protected] disclosed. However, we observed practices in Amsterdam, Brussels, This year 86 companies have that there are still areas of Dusseldorf, Madrid, Munich, achieved the Gold Award, EPRA’s improvement. In particular, London, Paris and Stockholm. A highest standard, including nine companies should make sure special thanks to Alina Canedo new companies. A total of 130 that the market is provided Martins for her involvement in companies earned an Award, with the appropriate level putting together this report and to representing 86% by market of disclosure details as EPRA’s Hassan Sabir and Anastasios recommended by the EPRA BPR. capitalisation of the companies Mitsios for their detailed review. It will be all the more necessary surveyed. Seven companies were If you would like any further since the methodology of granted the ‘Most Improved information about the survey, the survey will be amended Annual Report’ Award recognising please contact me, or alternatively next year to focus on stricter their significant progress. EPRA’s Finance Team at randa@ compliance. Although not Compared with last year, these epra.com. Deloitte real estate included in the review, we results show that the industry has teams from across Europe would encourage companies to add made a further step towards be pleased to welcome the specific comments (including greater transparency. opportunity to meet locally with bridges from one year to the companies to discuss the survey Over the last five years, the next) to their EPRA metrics and individual company results. industry has outstandingly to allow investors to better improved its level of compliance understand the performance. 3 Deloitte - EPRA | Annual Report Survey 2019/2020
1. Scope of the survey
Companies reviewed 168 annual reports • Aldar Properties PJSC • Grit Real Estate Income Group Ltd for the year ending • Atom Hoteles SOCIMI, S.A. • Growthpoint Properties Ltd between 30 April 2019 • Azrieli Group • Investors House Oyj and 31 March 2020 • BCP - Brack Capital Properties NV • Samhällsbyggnadsbolaget i Norden inclusive were reviewed. • Budapest Real Estate plc AB The scope of the • Cromwell European REIT • Warehouse REIT plc survey covered only • FCR Immobilien AG • WP Carey Inc. EPRA Members as of 31 March 2020, irrespective of their • A&J Mucklow Group plc • Hufvudstaden AB geographical region. • Albirana Properties SOCIMI, SA • Klövern AB • Dream Global REIT • Nyfosa AB • Fastighets AB Balder • Polski Holding Nieruchomosci SA • Godewind Immobilien AG • AB Sagax • Green REIT plc • Summit Properties Ltd • Hansteen Holdings plc • Terreïs • Hembla AB • Triodos Vastgoedfonds NV • Hemfosa Fastigheter AB • Victoria Park AB • Suomen Hoivatilat Oyj • Wallenstam AB
2. BPR Awards methodology
A detailed primary review of annual reports NAV, NNNAV, Net Initial Yields, Vacancy Rate results and after a moderation process, was conducted by Deloitte real estate and Cost Ratios. Information on like-for-like companies were identified for Gold, Silver or assurance teams from seven countries: UK, rental growth as required by section 4.5 of Bronze Awards and for the Most Improved Germany, Belgium, the Netherlands, France, the BPR and capital expenditure reporting Annual Report Awards. Spain and Sweden. (section 4.7) were also taken into account A final review of the results was then They performed their evaluation based on when calculating the score. performed in collaboration with EPRA to determine the final allocation of Awards. a comprehensive questionnaire organised Consistency across each of the companies in conjunction with the EPRA Best Practices surveyed were ensured through kick-off A detailed presentation of the Deloitte EPRA Recommendations as released in November calls and regular Q&A sessions. A secondary Awards Methodology is available on the 2016. review was performed by Deloitte real EPRA website. The allocation of points emphasises on the estate specialists, focusing on key measures six performance measures: EPRA Earnings, and areas of contention. Based on the
“It is heartening to see the remarkable uptake by the European listed real estate sector over the last five years. Tremendous work has been put in by the companies’ finance teams and EPRA staff in producing quality, comparative non-GAAP reporting, and I congratulate them both. Investors and analysts alike find EPRA BPR reporting to be invaluable for their analysis, and we hope to continue improving the uptake, robustness and comparability of all BPR metrics.”
Hassan Sabir, Finance & Sustainability Director, EPRA
4 Deloitte - EPRA | Annual Report Survey 2019/2020
3. Highlights
2015 2020 106 companies reviewed 168 companies reviewed 60 Awards 130 Awards 33 Gold Awards representing 86 Gold Awards representing 71% by market capitalisation 70% by market capitalisation
Most Improved Annual Report Award winners: • Arima Real Estate SOCIMI, S.A. • Baltic Horizon Fund • BMO Commercial Property Trust • GCP Student Living plc • Home Invest Belgium SA 78% • Shurgard Self-Storage SA 16 of the companies in the • Target Healthcare REIT companies reviewed survey gained an Award: in last year’s survey 86 Gold Awards moved up and gained 28 Silver Awards a higher Award: 16 Bronze Awards 8 new Gold Awards representing 86% by 5 new Silver Awards market capitalisation 3 new Bronze Awards
94% 59% of companies reported of surveyed companies EPRA NAV and, on a disclosed all 6 KPIs, Like-for-like basis, 99% including cost ratios (74% disclosed this metric by market capitalisation)
Otherwise specified, the figures shown above are in absolute numbers and not by market capitalisation. 5 Deloitte - EPRA | Annual Report Survey 2019/2020
4. Award winners
GOLD
77 COMPANIES KEPT THEIR GOLD AWARD
6 Deloitte - EPRA | Annual Report Survey 2019/2020
GOLD
9 NEW COMPANIES WON A GOLD AWARD THIS YEAR
MOST IMPROVED AWARD
GOLD SILVER
7 Deloitte - EPRA | Annual Report Survey 2019/2020
5. Survey results
A further step towards greater transparency igure 1 How man Awards ha e been granted
Last year, the industry celebrated the success of the 86 80 2016-2018 strategic plan implemented by the EPRA Reporting & Accounting Committee. This plan set out a challenge to reach 55 Gold Awards and 90 awarded companies by the end of 2018. This year’s survey* demonstrates that the European real estate industry has continued to make progress towards greater 28 1 transparency. 16 1
Out of the 168 annual reports reviewed this year, 130 (2018/2019) companies earned an award, comprising: 2019 2020 • 86 Gold Awards, representing 70% by market capitalisation, including nine new Gold Awards winners this year;
• 28 Silver Awards; and igure 2 How man EPRA members taking art in the sur e won a meda • 16 Bronze Awards. o pan e urveye u er o o pan e
Altogether, these 130 companies represent 86% of the 0 90 scope of the review by market capitalisation. 0 0