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EPRA issues guidance on disclosure of cost ratios by property companies

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12 Jul 2013

The European Public Real Estate Association (EPRA) has today issued guidance on the reporting of cost ratios by public real estate companies, supplementing its Best Practices Recommendations (BPR) published in August 2011.

EPRA has received feedback that investors and analysts would like to see more transparency over operating costs incurred by property companies.  As a result of this they have developed two new EPRA Performance Measures - "EPRA Cost Ratio (including direct vacancy costs)” and “EPRA Cost Ratio (excluding direct vacancy costs)”.

EPRA recommends that these additional measures should be included by companies in the table of EPRA Performance Measures recommended by the EPRA BPR.

As with the other measures, the guidance on presenting the new measures includes supporting calculations to be presented in the annual report.

The document also includes a recommendation that companies disclose the amount of any directly attributable overhead and operating costs capitalised during the year, even if nil, to aid transparency in this area.

The new recommendations can be downloaded here (link to EPRA website).  They are expected to be included in the revised BPR, due to be published later this year, but for the moment reside in a standalone document.

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