UK- Investment in property is set to become more transparent following the launch in London by the National Association of Pension Funds (NAPF) and Association of Property Unit Trusts (APUT) of a new code of best practice for the management and accountability of property funds.

The new measures upgrade an existing APUT code of practice, which promotes greater transparency about funds’ activities and the standardisation of reporting to investors. This included information on subscription/redemption procedures, pricing, investment in close-end structures, distribution arrangements, standardisation of performance records, statements on gearing, unit holder analysis and management fees.

With the support of the NAPF, the code has now been substantially revised and includes an additional section dealing with management structures and accountability, as the association is keen to see greater clarity so unit holders have a visible corporate governance structure.

While the code does not seek to prescribe one particular structure in preference to another, it acknowledges that trustees, managers and advisory committees have roles to play. It strongly recommends that each trust issues a prospectus or explanatory memorandum clearly explaining the roles and responsibilities of all the parties involved in the management.

Since the introduction of its code in 1997, APUT has noted a marked improvement in the disclosure of information in annual reports. Even though it is a voluntary code, it has been substantially adopted by members. This enables investors to make clear comparisons between different funds.

John Wigley, Chairman of the NAPF property sub-committee, said; “Our support for the APUT Code recognises the increasing importance of indirect property funds, like PUTs, in investment portfolios and the fact that investors have the right to expect the same level of transparency and accountability which are routinely prescribed for other asset classes. The code clearly sets out the standards for what the NAPF and APUT believe should be regarded as best practice.”

Ian Mason, chairman of APUT comments: “This Code has been put in place to protect investors who have the right to know how a fund is being managed.” The new joint code comes at an important time with investors being offered an increasing array of property vehicles and partnerships.

“You don’t have to be a PUT to comply with the spirit of the code and investors should be wary of any fund where the standards set by the NAPF and APUT are not being followed,” he says.

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