Summer 2012, Vol. 37, No. 1

Abstract: In the current private and institutional real estate equity fund environment, periodic reporting of investment returns is both prudent and mandatory. This performance data is particularly important to pension and retirement plan investors in various open-end funds, say the authors. Since participants (investors) are permitted to enter or exit open-end funds on a periodic basis, the interest(s) purchased or sold must be based on appropriate asset values effective at the transaction date. To increase accuracy, the valuation approach must facilitate the timely recognition of development/entrepreneurial profit achieved on a proportionate basis as the project progresses through the construction and occupancy stabilization process. This article explores some of the technical approaches to address this issue.