AREF explains why real estate investors should care about the association's Quality Mark guarantee of high standards in fund governance.
Anyone that has had children or knows anyone that has, may have good cause to question this headline. But for real estate investors, it seems there may be something in this.
One year ago, the Association of Real Estate Funds (AREF) launched its very own Quality Mark. Every fund that signs up for membership of AREF, makes a commitment to adhere to the association's Code of Practice. Once a fund has certified that they comply with the latest code, issued annually, AREF verifies this and issues them with that year's Quality Mark.
But why should investors care about this? Well, for some years, sound governance has been high on every investor's agenda, perhaps now more so than ever. AREF's Code of Practice hits that target square in the centre, promoting best practice across the main areas of concern for any investor and based on three key principles: operational integrity; transparency; and accountability. Every member fund of AREF signs up to the Code, moving them from mere statements of intent, to a much more demonstrable commitment to the highest standards of corporate governance.
The AREF Code of Practice and the Quality Mark that comes with it, is the gold standard in transparency and corporate governance for real estate investment vehicles. And through the Quality Mark, real estate investors can easily identify which of those vehicles available to them are clearly delivering the high standards of transparency and governance that they require. Does your real estate investment have a Quality Mark? Perhaps it is time to find out.
Currently, the association has around 65 member funds, representing in excess of £70bn, measured by their net asset values. It includes large funds, small funds, balanced funds, sector-specific funds, core, value-add and opportunistic funds, open-ended and closed-ended, real estate investment trusts (REITs) and real estate debt too - you get the picture, it is very inclusive. Indeed, membership also extends to affiliates, those firms that provide an extraordinary wealth of expert advice and support to these funds: tax advisers; law firms; fund administrators; developers; property consultants etc.
The association isn't just about the Code though. AREF acts as a forum, bringing all these stakeholders together through regular seminars, roundtable events, training and consultations, to discuss and debate topical issues, resolve challenges and identify opportunities. AREF also engages with regulators, government policy makers and other industry bodies too, helping the industry evolve and aiming to ensure the optimum operating environment for the real estate investment management industry, ultimately protecting investors' interests.
Free membership - please form an orderly queue
Perhaps saving the best news until last, AREF has recently announced that it now offers an Investor Membership, which is free. The last part of that sentence seems worth repeating - it is FREE. Professional investors interested in real estate funds (e.g. company and local government pension funds, multi-managers, wealth managers, private banks etc) and their advisers, can now join the Association of Real Estate Funds as Investor Members.
AREF has long sought the engagement of investors to help set their agenda. In addition to the AREF Investor Committee, investors have a seat on a number of other committees, as well as the board. Investor members will be able to keep abreast of interesting developments in the real estate funds industry and receive invites to the various events AREF put on for the industry - which are free for members too! Readers interested should register on AREF's website: www.aref.org.uk.
Of course, none of this can insulate real estate investors from such issues as future market cycles or potential disappointing performance. So, maybe AREF's year-old Quality Mark alone doesn't quite allow investors to sleep at night. But in terms of seeking sound governance and transparency, perhaps investors with funds displaying the AREF Quality Mark can at least rest a little easier.