Real Estate Investment Funds: Financial reporting - Alfi

what information is required when calculating the fund NAV of a FOREF?
4. What is the
recommended method
for calculating the Fund
NAV of a Fund of Real
Estate Funds?
a. As a general principle, Fund of Fund NAVs
must take account of the latest available
published information at the NAV cut-off
point. This includes the latest available NAV
per unit/share for the investee funds, any
transactions with the investee fund e.g. capital
calls, distributions etc. up to the NAV cut-off
date, and any other information relevant to the
investment valuation known to the Fund
including any estimates provided by or
discussions with the investee fund manager.
Refer to Chapters VIII.1 and VIII.2 for the
more detailed information that might be useful
for fund of real estate fund NAV calculations.
b. There may be a difference between the NAV
published at the relevant NAV cut-off date
and the valuations in the financial statements
published subsequent to this date, as a result
of further information being received. This
difference is a reconciling item between the
Investors Equity in the financial statements
and the NAV, and should be presented as
such in the NAV statement. Normally these
differences are only accounted for on a
prospective basis in the NAV computation
and this should be specified in the Fund
Documentation.
c. Consideration of the timing of receipt of
investee fund NAV’s and release of Fund of
Fund’s NAV is very important in achieving a
fair but practical valuation process. Not all
information received as at the NAV
publication date will necessarily be audited.
However audited information, when
eventually received, should be reconciled with
unaudited information and the results of this
process taken into account in accordance with
the principles described above.
d. Appropriate approval of fair values for Fund
NAV and financial statement purposes is an
important control in the valuation process of
a Fund of Funds. Normally all the relevant
information to establish the fair value of
investments will be summarised, reviewed
and approved by the Fund on the date of
release of the Fund NAV and the date of
release of the financial statements. The Fund
may also develop and document specific
guidelines and principles relevant to this
preparation and approval process, such as
concerning the quality and timeliness of
information received prior to the approval of
fair value by drafting and applying a
consistent Pricing Policy, duly approved by
the Fund management.
e. For any listed securities holdings, the last
available bid price should be used.
32