I have thoroughly enjoyed my first two months at EPRA, getting to know the team, meeting with the membership, and getting a better grasp of the raison d’être of the association. When I took up the CEO role I have been entrusted with the complex task of implementing EPRA’s Strategy Review. Talking it over with those of you who I already met gave me confidence that EPRA is going in the right direction. While I look forward to discussing it further at our Annual Conference in September, let me share here my initial thoughts on where EPRA’s focus will be.
We aim to extend EPRA’s relationship with our Index partners FTSE and NAREIT to develop new products such as sub-indices for Exchange Traded Funds and tailor-made indices for individual companies.
In the research area, we will be more forward looking in our analyses and will prioritise studies that demonstrate the powerful role investments in listed real estate companies can play in the asset allocation of institutional investors.
We intend to concentrate more on ‘generalist’ institutional investors, asset managers and private wealth managers, where greater gains can be made through education on the benefits of listed real estate than among the already converted specialist-type investors. It may take some time, but when large generalist investors make even relatively small shifts in asset allocations the impact on a particular sector can be substantial and they are far more underweighted in listed real estate than they should be.
Another area we will push is in developing relationships with other local industry associations, such as pension, insurance and asset management groups, to open access to their membership bases and convince them to consider raising their allocations to property stocks.
EPRA has established a very solid bridgehead in Asia in the last few years and our close partnership with NAREIT means we are well represented in North America. We will now give more attention to Investor Outreach in our European home markets and I will make this a priority in the coming months.
The ongoing transition from defined benefit to defined contribution pension schemes, as well as the GICS reclassification of listed real estate as a stand-alone equities asset class, represent other opportunities for EPRA and our industry. We will closely monitor these trends and seek the best ways to exploit them in the interests of our members.
EPRA will continue to reinforce industry compliance with the financial Best Practices Recommendations (BPR). In order to address the European institutional investors’ growing interest in Environmental, Social and Governance (ESG) matters, EPRA will work to bring the Sustainability BPR up to the same level of corporate acceptance and integration in annual reports that has been achieved in financial BPRs. To this end, EPRA has recently recruited a specialist in the Brussels team to focus on sustainability and ESG.
A clear focus of EPRA’s advocacy work has to be on the EU Solvency II regulations, which unjustifiably penalises real estate equities with high capital weightings in institutional portfolios, relative to other forms of property investment. Solvency II is a major impediment to institutional capital flows into European listed real estate within the EU’s Capital Markets Union and amending its effects could correspondingly boost investment significantly.
The Public Affairs team will also concentrate its efforts on further developing new REIT regimes in Europe, in the first instance in Poland and Sweden where a clear process is already underway.
Deepening our cooperation with other national and international real estate associations, including through the Real Estate Equity Securitization Alliance (REESA), on issues where we have common agendas is another good way of magnifying our efforts and efficiency.
All these efforts will be supported by targeted communication materials, and we will make sure to keep you up to date on our activities and achievements.
I look forward to us working together in implementing the plan and encourage you to contact me or members of my team with any initiatives.
Dominique Moerenhout
EPRA CEO