Understanding global differences: Methods of real estate NAV calculation vary globally and reflect regional differences in accounting standards
For global investors in real estate, regional variations in net asset value can become a significant headache. A recent paper by the Global Standards Steering Committee of INREV, ANREV, NCREIF and PREA, NAV Comparison 2019: Mapping the differences across regional industry practices, has taken a look at how NAVs are calculated globally and highlights some of the regional differences.
One of the challenges in establishing a global standard for NAV calculations, notes the paper, is that “fair value accounting principles are not consistent across the globe, and investment managers may use different NAV adjustments for reporting performance and/or pricing units.”
Specifically, the generally accepted accounting principles in the United States (U.S. GAAP), issued by the Financial Accounting Standards Board, have some significant differences with the international accounting standards promulgated by the International Accounting Standards Board through its Internat