Closing the Books | 2025 Year-End Considerations for Real Estate Professionals

So role of automation in month end closing. Now let's talk about where automation really changes the game. The month end close. So many accounting teams spend the first week of the month reconciling, reviewing and reposting entries. Automation targets exactly those repetitive tasks, automating journal entries, reconciling bank and sub-ledger data triggering workflow approvals, the benefits, faster closing times, fewer human errors, and more reliable data for audits and compliance. Think of automation not as replacing your accounting team, but is enhancing their capabilities, freeing them to analyze results instead of chasing transactions. So the key benefits of automation, once automation is in place, you start to see measurable gains across six key areas. Increased efficiency closes take days instead of weeks, your improved accuracy. Automated validations catch outbound accounts instantly better decision making, real-time dashboards replace lagging reports, cost savings, fewer manual hours and fewer error corrections, scalability, as your portfolio grows, automation absorbs the extra work without adding new headcount and then enhanced compliance and audibility every transaction. The digital trail In the real estate world where investors demand transparency and regulators expect precision, these benefits aren't optional. There are strategic advantages.

So let's do a quick pulse check. Do you currently utilize automation in your month end close process A, yes. Fully automated B, yes, partially automated C, no, we do everything manually. Or D, we're considering implementing automation. We'll give you a minute to respond. This will help us understand where you're at in your automation journey. So costs involved in automation. Of course, automation isn't free, it's an investment. So let's talk about the main cost categories first. There's software and technology costs, subscriptions or licenses for automation platforms, integrations and data storage, implementation costs, your configuring systems, setting up rules and connecting data feeds, maintenance costs, ongoing updates, patches, technical support, and then of course training costs equipping your team to use the new tools effectively. While these costs can seem significant upfront, the ROI often materializes within one to two years reducing close times and fewer manual corrections.

I'm glad to see people are partially automated. Let's see if we can get everyone to fully automated would be great. So implementing automation and measuring success implementation doesn't happen overnight. It's a phase journey. Here's how we guide clients through it at EisnerAmper. So first, identify processes for automation, target, repetitive rule-based tasks like data entry, invoice routing and reconciliations. We gather baseline data. How long does the process currently take, how many errors occur? And then conduct process mapping. Use flow charts to visualize current workflows and find bottlenecks X and then design and implement the new process, build in automation while eliminating inefficiencies. And then we monitor and adjust. Automation isn't just set and forget, refine as business needs evolve. And then of course, measure success. Track metrics such as time saved, error reduction and cost savings to prove ROI Over time, this data becomes a compelling story for leadership and for your audit committee.

Showing tangible value system controls and automation are no longer future concepts. The competitive necessities, whether you're managing a single asset or nationwide portfolio, stronger control mean better data integrity, faster reporting, and smarter decisions. So here at EisnerAmper, we help clients assess their readiness, choose the right automation tools and design government frameworks that scale. So our 500 real estate professionals bring both technical expertise and industry insight, ensuring solutions fit the nuances of property accounting, fund administration and construction finance. So thank you for being here today. I hope the insights covered give you clear actionable steps to enhance your controls and automation strategy. I'll now pass it along to Sophie Martins to discuss AP best practices for end of year.

Sophie Martinez:Thank you so much Marie for that introduction. My name is Sophie Martinez and I'm on the EisnerAmper Treasury and payment solutions team where we help real estate clients implement some of the controls and automation solutions that Marie discussed specifically in treasury and payables. So I'm going to talk to you today about some end of year best practices for accounts payable. We've provided a little checklist here, some items that are top of mind to ensure that as you're closing your books for the end of the year, you're in a great place in terms of your accounts payable on your books. So one of the main items that you want to do is you want to make sure that your AP aging in your accounting system ties out to whatever your vendors are showing on their AP aging. So I encourage you to proactively reach out to your vendors and request statements from them.

If you don't have them already, they may also send them to you on a monthly basis. So that's great. You have a great place to start and I really recommend doing this with any vendor specifically where you have a high volume of transactions, bills and credit memos. And when you review those lists against the statement the vendor provides versus what you have in your accounts payable in your system, make sure that you're looking at the total ending balance as of the end of year or in this case would be as of November 30th because that's our most recently closed period. And make sure that also the invoice numbers and credit memo numbers, those values for those individual items tie out as well. If you have very large volumes of transactions and if you do have credit memos, now is the time to use them. You're getting to the end of the year.

You don't want to forget about those. So it's a great time to offset those credit memos against any existing bills that you have on your books. And when you do that, let your vendors know that you're doing that so that they can on their end, update their records. And then if you have a credit memo that's been sitting out there and you don't have any bills to apply it too, now's the time of year too to reach out to your vendors and say, Hey, I'd really like a refund for this credit memo. We're at the end of the year and I don't see any good opportunity for me to use that. Also, you're going to want to look at your AP system. So if you have an automation system in place like Marie's discussed earlier and accounts payable automation solution, you're also going to have an ERP system, your accounting system, and those systems talk to each other, but they don't always talk perfectly.

Most of the time they do, but you want to make sure that once you're at end of year, that your numbers between those two systems match. So you're going to look at your accounts payable balance and your accounts payable system and then also in your accounting system and make sure that your end of month throughout the year and also your end of year balances are tying over to each other. And if you're finding discrepancies, you're going to want to look into that and identify and solve for those. You're also going to want to clear any sync errors that you might have in your accounts payable system Sync errors are created when sometimes those two systems have an issue talking to each other and they've identified it and said, Hey, we see you paid a bill in one system, we can't find it in the other.

Something along those lines. That's just one example, but you'll want to find those sync errors, get them cleared out before year end because once you close the books, it's very hard to reopen them and you might have to do that to clear out those sync errors that are sitting there to adjust for any missing items. And then additionally, if you have a AP cash account in your AP system, a lot of the AP systems do you send money to that system and they hold the funds for you. You are going to want to make sure that you're reconciling that to your books within your ERP accounting system. You should treat it just like a bank account. You should use your cash management module to perform a bank reconciliation. Ideally you should be doing that every month, but maybe you've fallen behind or haven't realized that you need to do that.

End of year is a really great time to catch up, clean up. Make sure that you get all of those missing entries into that account's payable system so that the cash balances in both of those systems tie. And then you're going to make sure want to make sure that your AP aging within your ERP system ties to your accounts payable listing on the balance sheet. So over the year you may have entries that cause there to be a discrepancy between those two systems. For example, if you're posting general journals to the accounts payable ledger as journal, that might throw off those balances. So you're going to want to look through and confirm that your month end balance, month over month and also your end of year balance ties out. And then if it doesn't, you're going to want to research and handle any discrepancies and you might have to potentially reverse that journal and appropriately enter that item as a bill payment, a bill, and an associated bill payment, which is always best recommendation and best practice rather than posting a journal to your accounts payable, we really do recommend creating a bill and creating a payment, which brings me to 10 99 preparation because if you're posting to accounts payable, often those entries that you're paying to your vendors are not going to show up and your 10 99 reports, which is now why it's a great time of year to make sure that you're in a good place so that in one month from now when you're very close to that 10 99 deadline, you are in a great place to file or you've already completed your filing because your information is ready to go.

And so to do that, you're going to want to make sure that you have w nines on hand for any vendor that you paid throughout the year, and you're going to want to make sure that you have a 2024 version of your W nine on hand. The IRS came out with an updated 2024 version last year, and so it's best practice to look through those. If you have a prior version, reach out to your vendors and say, Hey, I'd really like you to update this ahead of time for the end of the year so that you can make sure all of your ducks in a row are in row and you have the right documentation on file. Now is also the time to run that 10 99 report if that is what you use to file your 10 90 nines out of your accounting system. You're going to want to look at the report now, identify any discrepancies, anything that looks like it's missing, so that you're making those fixes.

Now again, rather than waiting until you're in mid-January and you're up against that deadline and trying to figure out why your report is missing information, it could be that you maybe have it marked vendors as 10 99 eligible or certain transactions as 10 99 eligible. So you're just going to want to make sure when you run that report, you're going to look at it and you're going to be able to catch some of those items. Additionally, you're going to want to review any AP entries that you made outside of your AP module. Like I said, if you're posting general journals to your accounts payable GL, you might have some of those entries that are not going to pull into that report. So go through your expenses ID any journals and just make sure that they're going to show up when you're looking for 10 90 nines and getting your reporting together to file those for end of year. So with that, I'm going to pass it off to my colleague Brenna LED day, who is going to talk a little bit more about 10 99 preparation.

Brenna LeDay:Thank you, Sophie. Good afternoon everyone. My name is Brenna LED day. I'm a manager on the financial management and disbursements team. I also lead our 10 99 strike team efforts where we support over a thousand entities with their 10 99 requirements. So I'm going to talk to you today about everyone's favorite topic this time of year, 10 99 best practices. So to begin, prepare now. And Sophie said, do not wait until January to begin review and reconciliation. You'd really be surprised with just how much of your reporting you can prep in advance and not until the deadline is here. Also, identifying a lead to take ownership of the 10 99 process with supporting several entities and clients and service lines. We often hear that those that have issues with the 10 99 process and find it really burdensome is there really isn't a lead identified to take ownership of the process. So having someone that takes it from reconciliation to e-filing can really, really streamline the process for your team. Also, identifying and troubleshooting missing information early and often.

We find that in the course of the year with various transactions, you may not have all the vendors up to date information and that really becomes apparent when you're prepping 10 90 nines. But adapting processes to identify missing information and try to obtain it and troubleshoot it early on will really put you in a better spot when you're preparing for 10 99 issuance. Additionally, knowing your deadlines. So depending on the form type, there are different deadlines, but the majority of the forms recipient mailing deadline for this season is February 2nd, 2026, typically January 31st, but there's a bit of an extra time there, not much, but forms need to be postmarked to recipients by February 2nd, 2026. Also leveraging a filing software. So depending on your volume, the 10 99 reporting process could be a large undertaking, but leveraging an e-filing software could really be a value add. Also, one of the, there's integration between a lot of accounting systems where your accounting system can communicate and plug in directly with a filing software to really streamline your reporting next 10 matching.

So 10 matching is a process that typically isn't as widespread as I believe it should be. It's a really great tool that validates your vendor information, their business name and their EIN against IRS records. And it's a really great best practice for 10 99 issuance because you can be certain that you're issuing a 10 99 to under a name and EIN that matches IRS records. If not, if that information has not been validated, that really increases the chance that you'll receive. IRS notices that the IRS says, Hey, something's misaligned here. You need a correction or you need to justify why this was filed in a certain manner. And those notices open up yourself or your business or your clients to penalties or fines if it isn't rectified properly. So adapting 10 matching can really reduce the chances of receiving IRS notices and finally reviewing the IRS website or any reputable source of information for updates and regulations. So over the past few years, there's been a lot of discussion around 10 90 nines and their requirements. So you really want to make sure you're up to date at when certain updates are going live because you could be drastically underestimating your reporting requirements or overestimating depending on which thresholds and which new forms were rolled out. So really being up to date on the latest 10 99 updates and regulations will set your team up for success. So now I'm going to pass it over to David and James for year end tax planning considerations.

David Rackman:Thank you, Brenna. Okay, I am David Rackman, a tax partner in our real estate group out of New York. Okay, today I'll be providing a fairly quick overview of some key year end planning updates, focusing mainly on bonus depreciation and section 1 79 expensing before James discusses additional entity level considerations. These changes are significant for businesses making capital investments and can impact real estate partnerships significantly. So for many of our real estate folks, bonus depreciation is the gift that always gives and it's back to a hundred percent. So businesses can accelerate deductions at a hundred percent for qualifying property like qualified improvement, property land improvements, and FF and e furniture fixtures and improvements for property acquired and placed in service after January 19th, 2025. That date is important. January 19th, 2025, anything before that still follows the old rules. So for property placed in service before that date, the old rules apply, which means you have 40% bonus or 60% for long-term property. Taxpayers can continue to elect using the 40% or 60% rates for property placed in service after January 19th if they prefer to for whatever reason. Similarly, section 1 79 expensing has been enhanced. The limit is now 2.5 million with a phase out threshold of $4 million, and that is retroactive to January 1st, 2025. This provision applies to tangible personal property off the shelf software and qualified real property that is used in an active trader business.

So there are two sort of planning points that I wanted to bring up to consider. So when deciding whether to take bonus depreciation, there's really two big questions to answer. First, who benefits? So rental real estate is generally passive for tax purposes, meaning losses from bonus depreciation can only offset other passive income until the property is sold. So individuals and tax exempt entities often see limited or potentially detrimental benefits unless they are active or qualify as real estate professionals for tax purposes. So the bottom line is limited partners could be hurt or at the very least won't necessarily benefit. We'll get to the could be hurt part in a moment, but they could be hurt by taking bonus, but at the very least may not benefit. So careful planning and consideration as to who your investors are, who's benefiting from the depreciation will impact this decision making.

Second, and not unrelated, is that there are state conformity issues to consider. So many states do not allow bonus depreciation and instead require an add back for the difference between bonus and what is otherwise allowable as regular depreciation. So many states starting point like California, New York, so their starting point for determining taxable income is taken from federal, and this applies even if the federal deduction was limited due to the passive loss rules. So a person who was limited to no loss, right? They weren't able to take any loss from a K one, they may still have to pick up income as a result of this add-back. This is something that we see happening fairly often and it can be very frustrating to one's investors. And so considerations have to be taken or have to be made to determine whether it's the best idea. One item to note and as a plug for our cost ag team is that cost segregation studies may still help by allocating shorter asset lives without triggering some of these potentially nefarious results from bonus add-backs. Two planning items that are not listed here that I thought should be considered as well is the use of repair regulations as well as considering what fully depreciated items can be written off and thus avoiding some potential recapture in anticipation of a potential sale. Those are important tools for getting the best results. These changes create opportunities for accelerated depreciation but require careful planning and consideration around investment and investor considerations. I will now turn it over to James to talk about some other key updates.

James Wang:Yep. Thank you David. Hi everyone, my name is James. I'm a tax director from the real estate group sitting in the OA office. Today I'm going to talk about 1 63 J and some year end planning or considerations. So for 1 63 J, it was originally in ACT during the TCJA and then it limits the deductibility of a business interest expense in general by the sum of the 30% of the adjusted taxable income plus the business interest income. And then prior to 2022, the 30% adjusted taxable income was calculated based on EBITDA, which is earning before interest taxes amortization, and they switched the rule from EBITDA to EBIT started in tax year 2022. So essentially depreciation amortization was excluded for calculating the 30% A TI and then essentially reduce your 30% ETI therefore increase the interest expense that will be subject to the 1 63 J. Now, many taxpayer started to subject to the 1 63 J because of that.

And then for non-resident, especially for the one way to get around with that is many taxpayers. There's an election you can make called real property trade business elections, and once you make that elections, certain assets, real estate assets will be subject to a longer depreciable life. And also certain assets such as qualified improvement property will no longer qualify for a bonus depreciation. And for non-resident real estate owners qualify improvement property plays crucial roles when it comes to taking significant deductions. And then that bonus has also been facing down in prior year to 80% for tax year 20, 23 and 60% for tax year 2024, and it was going to face down to 40% to 2025. As a result, many real estate owners start to making that 1 63 J real property trade of business elections, and then that election is the irrevocable elections. Now what O-B-B-B-A has fundamentally changed the taxpayer's real property trade business calculation in two important way.

And first it has, as David mentioned, has restored the bonus depreciation from 40% for tax year 20, 25 to a hundred percent for any qualified asset that's placed in service after January 19th, 2025, and also has reinstated the use of the EBITDA for purpose of calculating the 30% adjusted taxable income. So as a result, many real estate owners who previously elect out the 1 63 J elections under the prior regime would not have done so had those rule been in effect when the real property trade business election were made. And currently there's no indication or guidance that grants relief for taxpayer to withdraw the previously 1 63 J election made. But we as Eisen Emperor were closely monitoring that and we update the group as appropriate. And one thing to mention is under the revenue ruling 2020 dash 2022, and that was issued back during COVID, that was in response to the Care Act taxpayer were allowed to actually withdraw from that existing 1 63 J real property trade business in action for certain tax years.

So as for taxpayer that have not made the real property trader business elections 2025 will be the year be do some careful planning analysis on your 1 63 J limitation and determine whether it makes sense to elect out the 1 63 J limitations. And then another important update for 1 63 J is for tax year beginning on or after January 1st, 2026, taxpayer would no longer be able to use the elective interest capitalization as a planning tool to kind of convert interest expense into a capitalized cost in order to obtain a deduction through depreciation. So in other words, you can't elect to capitalize interest expense that would otherwise be deductible simply to avoid interest limitation rule for 2025. If you continue planning to use that technology as kind of a planning tool for you to manage your 1 63 J limitation 2025 will be the last year for you to still use that tool.

And then importantly, this restriction applies only to elective capitalizations. So if it is required that you need to capitalize under the existing rules such as section 2 63 a F, or the section two 60 3G, those will generally not be subject to this restriction and you're still required to capitalize before subject to the 1 63 J with that and also spent a few minutes to talk about some updates versus the TRS asset test. So prior to OB three, during TCJA, the TRS is a quarterly test. And then for a REIT, you cannot own more than 20% of its gross asset. That consists TRS security. Now that 20% has been increased from OB three to 25%. So that provides somewhat flexibility for REIT that specifically or heavily in the service oriented industries such as hotel REITs or healthcare REITs. And then another update is treasury has proposed to withdraw the look through rule for domestic control REITs, and it was on October 21st, 2025, the treasury issued a proposed regulation that would remove the domestically domestic C corporation.

Look through rule that was adopted in April, 2024, final ferta regulations under fer foreign investors, investor generally has to pay US tax on gain from sale of a US real property interest. But exception of that is that if you sold a stock that is in a domestic controlled REIT, meaning if more than 50% of the restock is owned by a US domestic entity or person, then you are excluded from that regime. So the 2024 final regulation for the first time required look through rule for certain non-public domestic C corp that were more than 50% forming, owned and potentially jeopardizing domestic control status for some of the private restructure. The new proposed regulation now withdrawal from that rule and revert back to the prior position that all domestic corporations are non looked through. Although the proposed regulation will be become effective upon finalizations taxpayer are expressly permitted to rely on the proposed regulation for that transaction occurring after April 25th, 2024.

So that IC provides another favorable updates for anyone that's considering to set up the read that consider using a blocker or that has rely on the domestically controlled region. With that, I'm going to also talk about some planning opportunity for QOZ. So for investor who previously deferred the capital gain by investing to a QOZ fund under the QOZ 1.0, now must recognize the gain on December 31st, 2026 or earlier if there's an inclusion event. And the resulting tax is due in April, 2027. Now the 2026 taxable gain is a lesser of the original deferred gain or the fair market value of the QOZ investment on December 31st, 2026 minus any basis in the QOZ investments if any. And for QOZ basis typically starts at zero. But if you held the investment for at least five years by December 31st, 2026, and then a 10% step up will be granted and then a 15% step up would be granted if it's held by seven years, for seven years by that date. And also that could also increase the basis. At the same time, if you have taken depreciation, obviously there will be some depreciation recapture. So the normal partnership rules for calculated basis still apply. So something to consider keep in mind. And then also if the December 31st, 2026 fair market volume has been declining in volume, a lower fair market volume could potentially reduce your tax bill.

And what's important is that that fair market volume should be supported by defensible valuations or through a qualified third party appraisal. And EIS BR valuation team can assist with substantiating that fair market volume. And also because it's a PTO income that you'd be recognizing you want to make sure you set aside enough cash to pay the tax by the April, 2027 and then also consider some tax loss harvesting strategies to offset that QOZ deferred gain recognitions. And then for sponsors, you want to start communicating or start gathering those information as sooner or later your investor will be coming for you to ask for that information. And as for investors, obviously the reporting and then the case is ultimately a responsibility of an investor. So you want be proactive and start communicating and asking for information to your sponsor and fund administrators. And with that, I'm going to kick to Amy to talk about audit.

Amy Menist:Thank you James, and good day everyone. My name is Amy Menist and I'm an audit manager with EisnerAmper's Real Estate Services Group. During this portion of the presentation, we're going to discuss ways to help you prepare for your upcoming year end audit. But first things first, we'd like to start off with a polling question. So true or false, auditors can prepare and audit a company's year end schedules. So while you guys are answering this question, I'm going to continue along. So in order to help you prepare for your upcoming year end audit, we've broken down the audit preparation process as one, planning two, timeline and deadlines, three deliverables and scheduling, four company best practices, and five common initial Year-End audit requests.

And so this brings us to our polling question, answer true or false. So auditors can prepare an audit. A company's yearend schedules false for several reasons, including independents. Auditors cannot prepare the year end schedules that they will also be auditing. It is the company's responsibility to compile, prepare, and review their books and year end schedules before submitting them to the auditors. So to start, planning is crucial to have an efficient audit. First schedule a kickoff meeting with both the company and the full audit engagement team and make sure agendas are shared in advance. During this meeting, you'll discuss several key topics, including but not limited to, significant real estate activity such as property acquisitions, dispositions, major improvements, renovations, or damages, as well as going concern considerations or new accounting pronouncements that may impact financial reporting as well as changes to the company's internal control policies and procedures and any significant agreements that were signed into effect during the year, including operating agreements, new loans or refinancing agreements and leases. And in addition, you should also perform some pre-year end conceptual work such as impairment analysis and budget and forecasts and going concern evaluations. So finally, during the kickoff meeting, both parties should agree on a timeline and key dates for the audit.

So step two, the timeline and deadlines. This brings us to our next topic, timelines and deadlines and by setting clear milestones is essential for an efficient audit. This includes setting dates for your planning meetings, deliverables of interim support, and the company's narrative authorization of year-end confirmation requests, as well as defining the delivery of the year-end work papers, trial balances, as in general ledger details, as well as the draft of the financial statements and ultimately the delivery of the finalized financial statements to keep track of these milestones. Some people find it helpful to create calendar invites for key dates to help the company as well as the audit team. Stick to this timeline. So it's important to note that missed milestones and continued delays can unfortunately negatively impact the audit, staffing, and overall efficiency. So setting clear expectations and sticking to these timelines and maintaining an open line of communication is crucial for overall audit efficiency.

So in efforts to meet these deadlines, overseeing the deliverables and scheduling are critical. So prior to providing support to your auditors, some companies find it beneficial to utilize a closing checklist to help make sure all end adjustments are recorded and that all year end schedules have been properly updated as well as reviewed. Additionally, your auditor may recommend using tools such as client portal or Smartsheets to track audit requests, assign requests to the company personnel, as well as deliverable due dates. Companies should aim for an agreed upon turnaround for audit responses, and this typically is about three to five days. Now, please be mindful and prior to submitting your work papers to the auditors, make sure they've been properly prepared, reviewed, and are complete, avoid partial or inaccurate submissions as it unfortunately creates delays in repetitive work. Always double check and confirm that work papers roll forward correctly and that opening balances tied to prior years ending balances.

Perfect example. Equity companies can help ensure a smooth audit by following some best practices. They can assess their staffing needs and train their accounting teams as well as designate a key contact for all audit communications, review books and work papers prior to submission to auditors for completeness and accuracy, as well as double check supporting documentation for consistency and ensure that ending balances agree with the trial balance. Communicate delays early, so scheduling and staffing can be adjusted as needed. And remember, auditors audit the company's work, they cannot prepare it, so delays in the company's support can unfortunately cause cascading inefficiencies, so proactive communication is essential.

Finally, let's review some common year end audit requests you'll typically receive from your auditors. These requests generally include listing and confirmations and statements of all cash, debt and escrow accounts, interest calculations with any default interest if applicable, and listing and calculations for any accrued expenses, accounts receivable balances as of year end, and an assessment of the collectability of any past due accounts receivable. A fixed asset roll forward schedule, including any construction and progress at year end as well as its retainage. And an assessment of repairs and maintenance versus capital improvements, leasing and revenue schedules, including deferred leasing costs, new leases agreements signed into effect during the current year, a rent roll at year end, as well as maybe some rental analytics, including a comparison to prior year and current year or even a current year versus the prior year's future minimum rent projection schedule, which of course brings me to our future minimum rent schedule requests and the straight line rent schedules and calculations depending on your reporting basis.

Also, any escalation schedules including calculations for tenant, pro rata, shares of common area maintenance insurance or real estate taxes. As well as a detailed breakdown and support for related party activity for financial statement disclosure purposes and your equity roll forward schedule in making sure that all contributions and distribution activity within the general ledger ties. So it's important to note that there are maybe additional items requested based on the company's business and their possible needs for additional audit work to be performed for either certs or pilots or OPEX or supplemental schedules as needed. And now I'm going to kick it off to my colleague Anna

Anna Kreditor:RESIG is a subsidiary of Eisner Advisory Group and we do fund administration and accounting services for private equity and private credit real estate funds. Today I'd like to go over NCREIF both as a resource that I use and our clients use a lot and also provide a market update from NCREIF News website. So NCREIF stands for National Council of Real Estate Investment Fiduciaries. It's a non-for-profit association. They serve institutional commercial real estate investors. That's their target base. They collect, validate and standardized performance data, and then they publish benchmarks, education and best practices across real estate industry. Their members are investment managers, institutional investors, consultants, appraisers and research professionals. And then they offer performance reports, reporting standards. There's I think two or three conferences they do throughout the year and there's tons of education and there is certificates you can do through NCREIF Academy.

NCREIF, they collect the data from the members quarterly and in one case monthly they produce indices and performance reports. Data is also available to members in masked form for research. It's broken down by investment type property fund, farmland and Timberland, and also fund type, property type region and other subcategories. They have various other tools for members like analytical tools and various query reports and other tools. This is reporting standards is where I spend most of my time. It's developed by NCREIF together with Pension Real Estate Association. The goal is to create transparent, consistent reporting across the real estate industry. They do reference global investment performance standards, US gap and Uniform Standards of professional appraisal practice. A lot is covered there. I use the financial statement disclosures probably the most. There is also fair value Accounting policy, manual valuation manual, various checklists for closed-end funds, debt funds, open-end funds.

There is a risk manual funds to cover. They do provide various reporting models for financial statements. Some of our clients follow them to a T. Some I introduced to N and then they now follow it and some don't follow it. And I think the goal is to get everyone to follow NA formatting. So we have the consistency. It's actively maintained and updated all the reporting standards that they have. It's important to know that they don't just cover gap financial statements that is covered by FASB. They reference them and then they provide additional reporting that properties and funds due to investors. So your LTV ratios and various other metrics are often not covered in your financials, but covered elsewhere. And Nacr does a lot of updates related to those.

This brings me to the last poll question of today. It's very simple. Have you utilized NCREIF reporting standards as resource before? A is. I have previously utilized NCREIF as a resource and B, I have not previously utilized NCREIF as a resource. Just to make this presentation more relevant to year end, I'm providing a market update from our NCREIF website, from the NCREIF news. They report valuation stabilization global and US property values have stopped declining and we have seen modest positive returns, meaning driven by rental income, not asset appreciation for performance metrics. I pulled the NPI, which is Nare Property Index. The various NCREIF fund indices weren't available yet at that time, but the Q3 return is reported at 122 basis points, mainly driven by income and our return of 472 basis points, which was up from last year. Senior housing is in the lead for the third street quarter, followed by the hotel and self storage.

Okay, so most of people who responded to the poll question have not previously utilized N for a resource. If you do deal with financial reporting to investors, I highly recommend you check it out. The last slide I have for today is just a quick market update from NCREIF website. They say that tenant leverage remains strong. Incentives are required to secure leases. Emerging markets lag capital mostly flows to develop markets for investors. Strategies investors value rental growth. They prefer flexibility and control, which is something we've all seen over the past few years. Investors seek a lot of control in the market. Core funds slightly outperform the non-core funds and rising financing costs push institutional investors to enter non BEC lending. Investors are looking to balance that. And equity strategies for returns not just stick to one or the other. I did add the links to various NCREIF resources from their website, so that will be available for everyone. And I think that's it for today. I saw some questions, but I think there'd be an answer in the chat.

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