EPRA Best Practices Recommendations


Wilhelm Breuer

After the publicly traded real estate companies, institutional investors, financial analysts, accountants and advisers had come together to form the European Public Real Estate Association (Epra) in 1999, Epra regarded it as one of its main aims to harmonise the different reporting standards in Europe and draw up recommendations for best practice in transparency and reporting for the publicly traded real estate sector. To this end, a committee of experts was formed in 2000 and this Best Practices Committee drew up the Best Practices Recommendations (BPR), which came into force at the end of 2001. These gave the listed property share sector in Europe uniform recommendations for best practice reporting, which have meanwhile become the benchmark for transparent, capital-market-oriented reporting in Europe.

The BPR are based on the International Financial Reporting Standards (IFRS) for consolidated financial statements and also provide publicly traded real estate companies with recommendations covering: the use of IFRS reporting options, standard performance reporting and additional transparency. These relate in particular to the following areas of reporting: accounting and valuation policies, structure of the balance sheet, income statement and cash flow statement, the notes to financial statements and other additional disclosures, portfolio information and net asset value/earnings per share.

Accounting and valuation policies
Under IAS 40, the International Financial Reporting Standards allow companies to choose between the fair value model and the cost model when valuing investment properties. Epra recommends accounting for such properties using the fair value model. Moreover, Epra requires that the fair values of properties be determined by external valuers in accordance with the principles of the International Valuation Standards (IVS), which are accepted by the real estate sector worldwide as the measurement standard for property.

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