EPRA releases updated Best Practices Recommendations for reporting by property companies

  • Book badge (green) Image

30 Aug, 2011

The European Public Real Estate Association (EPRA) has today released its latest set of Best Practices Recommendations (BPR). These recommendations set out additional performance measures and supplementary information to be presented in the annual reports of public real estate companies, with the aim of making the financial statements of these companies clearer, more transparent and comparable across Europe.

The EPRA BPR sets out a number of recommendations for public real estate companies, all of which are designed to enhance the comparability of their annual reports. It recommends that:

  • All companies should present a summary table showing standard 'EPRA Performance Measures', as well as detailed supporting calculations for these measures.
  • All companies should apply the IAS 40 fair value model in accounting for their investment properties, using external valuers to obtain these values.
  • All companies should present information on the nature of their property portfolios, significant properties owned and like-for-like rental growth.
  • All companies include certain information regarding their strategy and board members in their narrative reports.


Performance Measures

The EPRA Performance Measures table is made up of the following items:

EPRA Performance MeasureDescription
EPRA Earnings

Recurring earnings from core operational activities.


Net Asset Value adjusted to include properties and other investment interests at fair value and to exclude certain items not expected to crystallise in a long-term investment property business model.


EPRA NAV adjusted to include the fair values of (i) financial instruments, (ii) debt and (iii) deferred taxes.

EPRA Net Initial Yield (NIY)

Annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of the property, increased with (estimated) purchasers’ costs.

EPRA ‘topped-up’ NIY

This measure incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free periods (or other unexpired lease incentives such as discounted rent periods and step rents).

EPRA Vacancy Rate

Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio.

These are all measures of performance in areas which property investment companies commonly discuss in their annual report but for which there is either no guidance in accounting standards (yields, vacancy rates) or a common desire to adjust the statutory measures (EPS, NAV).  The aim of the EPRA BPR is to introduce consistency across companies in the way in which these measures are calculated and presented, to aid comparability.

The BPR also contains comprehensive guidance on how each of the measures should be calculated and sets out tables of the calculations that should be provided for complete transparency.


Investment property measurement

IAS 40 Investment Property allows companies a choice between accounting for investment property at fair value and at cost.  The BPR recommends that all public companies should apply the fair value method and obtain valuations from external valuers, prepared in accordance with International Valuation Standards at least annually, something which is not specifically required by IAS 40.  It also recommends that the basis of the valuers fees should be disclosed, along with either a summary of the valuer’s report or a table which reconciles the amounts provided by the valuers to the amounts included in the financial statements.


Portfolio details

The BPR recommends that companies should include extensive information on their property portfolios either as part of their narrative report or in an exhibit, so that investors can understand the characteristics of the underlying assets and the effect of portfolio changes on the company's performance. This information includes:

  • Details of the company's property portfolio, presented by appropriate sub-portfolios, and with separate analysis of investment assets and development assets; and
  • Growth in like-for-like net rental income.


Other recommendations

The BPR also includes additional recommendations around information which companies should include in their narrative reports, including information on the company's strategy and details of the qualifications of the directors.

The EPRA BPR can be downloaded as a pdf here (link to EPRA website)

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.