Real Estate Investment Funds: Financial reporting - Alfi

net asset value calculation
1. Does the net equity
or net assets
attributable to unit
holders/shareholders in
the financial
statements always
correspond to the Fund
NAV and unit/ share
pricing?
a. Not always, as there may be reconciling
items between the GAAP applied in the
financial statements, and the definition of
the Fund NAV calculation per the Fund
Documentation.
b. As discussed throughout this document,
depending on the Fund GAAP the following
adjustments (reconciling items) could be made
to the fund GAAP NAV, e.g. based on INREV
guidelines:
fair value adjustment to properties under
development or held for trading purposes
(refer to Chapters III.2 and III.3);
deferred tax adjustment to take into account
the manner of disposal of the properties and
tax structuring (refer to Chapter III.11);
transfer tax and purchasers costs
adjustments to the investment properties
(refer to Chapter III.6);
adjustment to bring the carrying value of fixed
rate debt to its fair value (refer to Chapter III.4);
adjustment to derivative financial instruments
(refer to Chapter III.10.c);
adjustment for formation costs (refer to
Chapter III.7);
tax effects and minority interest effect of the
adjustment above;
other adjustments which would present fairer
the Fund NAV in accordance with the Fund
reporting objectives and investors requirements.
c. In addition, the NAV based price offered
to new investors may include adjustments
for property acquisition costs to reflect a
fairer spreading of such costs between
investors over certain period of time
(refer to Chapter III.6).
d. There may also be reconciling items due to
information becoming available between the
date of calculation of the NAV and the date
of approval of the financial statements by
the Fund.
e. Reconciling adjustments made between the
financial statement GAAP and the NAV and/
or Unit/Share Pricing calculation may contain
some adjustments in order to bring the NAV
closer to fair value in a real estate market
context, or to rebalance the value of equity
interests to reflect a fairer treatment over time
of expense write offs or similar elements.
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