Streamlining data exchange: INREV SDDS in action

The INREV Standard Data Delivery Sheet (SDDS) is now a well-established mainstay of communication between real estate vehicle managers and investors across Europe.  Since its inception in 2012, the system has evolved to meet the changing needs of the industry and its regulators, a journey that continues to this day. 

The latest release of SDDS is version 4.0, which not only includes the key vehicle terms, financial data and investor information of previous editions, but also for the first time asset-level data and more global definitions. Another transformative step has been the introduction of the ESG SDDS, at the end of 2023, covering the most important sustainability metrics and information required by investors and regulators.

SDDS: one standard, no more duplications  

John Fahey, Managing Director within CBRE Investment Management’s Fund Finance team, says that SDDS has played an important role in the development of his organisation’s reporting, particularly in the open end fund business.  ‘As you’d expect from the name, it’s the standardisation of information requirements that has proved really valuable,’ he says.  ‘In the early years, there were many different ways that managers could structure their data, and various formats in which this could be provided to investors. This made it difficult to know how to proceed. Once INREV developed a standard structure, we were able to implement that and streamline the number of different reports we produced. We have almost 200 clients in our open end funds, and most of these are now familiar with SDDS.  This has not just been important for us but for the whole commingled funds business across Europe, whose growth has been aided by the SDDS.’

Coming up to date, John sees the next big opportunity for INREV as further developing the data standards so manager and investor information systems can communicate more effectively, perhaps with direct interfaces replacing the current reliance on populating Excel spreadsheets.  ‘As chair of INREV’s Reporting Committee, I’m increasingly aware that this is something both sides of the industry want to see, and the information platforms that managers work with should be able to facilitate this. The benefits could be huge, we could significantly enhance the efficiency and transparency of data exchange, streamline operations and build investor confidence through improved data reliability. Furthermore, with an enhanced data framework, data solutions would be scalable and progress in all manner of areas would accelerate. ’

A first glimpse of implementing the new ESG SDDS 

At CBRE Investment Management, John is also now getting to grips with implementing the ESG SDDS.  ‘This feels more straightforward than in the early years of SDDS,’ says John, ‘mainly because it’s something new so there isn’t the need to ensure compatibility with legacy systems.  There also isn’t so much of a challenge with international alignment as there was with the financial and commercial data, where INREV contributed essential steps towards standardising definitions globally.’

Chief Sustainability Officer at Savills Investment Management, Emily Hamilton views ESG SDDS as providing a crucial addition to the reporting structures linking managers and investors.  She sees one key advantage as having all the data needed to comply with EU reporting regulations such as SFDR together in one place. 

‘When the industry is overwhelmed with so much data it’s good to be able to streamline things in the way ESG SDDS allows,’ she enthuses. ‘The main focus of the template is energy emissions, while secondary areas such as social impact are not treated as mandatory. This can help managers like ourselves to prioritise our efforts.  We want to combine our sustainability reporting efforts with actions, so the data needs to drive our activities, whether it be environmental or social. And when the data gets passed on to investors, we want that to form the basis for a discussion of our management strategy, not just be used for regulatory reporting.’

Savills IM are currently in the process of automating their data input for ESG SDDS in collaboration with their data platform providers.  ‘It helps that the INREV guidance on data frequency is flexible, as much ESG data is only available annually,’ she suggests.  ‘In most jurisdictions, tenants are not mandated to provide this kind of data, so it may not be produced to a standardised frequency. This flexibility on timing gives organisations the chance to go through the necessary verification process, which is very important when using what are often new data sources - the ESG SDDS has been very smart in that way.’

Like with the original INREV SDDS, the ESG SDDS allows for data to be provided at the asset level as well as for the vehicle as a whole. ‘Building-level data should allow you to see why emissions have changed, for example – is it because occupancy has changed, different operating hours, changes in equipment, and so on? It allows you to ask the right questions. It’s not just about a benchmark but also about understanding the underlying performance.’

As chair of the INREV ESG Committee, Emily also believes that standardising asset level data along these lines could be important for industry-wide concerns, such as linking ESG characteristics and valuations. 

INREV has just established a dedicated focus group on this topic to help investors and managers evaluate how ESG goals impact underwriting inputs and expected returns.

To learn more about the SDDS  or ESG SDDS, visit their dedicated pages or contact the INREV Professional Standards team.