"The craving for a wine-party has been infinite and much that it has sometimes brought me close to tears." 

The Emperor Babur, founder of the Mughal Empire, (1483–1530)

Longtime readers of this newsletter will have come across previous dips into the history of Uzbekistan. Babur, Timur-i Leng and Ulugh Beg will no doubt get their own comprehensive historical trivia in due course, but we use Emperor Babur for our lockdown opening quote on this occasion merely to mark the return of our history of alcohol trivia series, to be found in its usual place at the end of the newsletter. Thank you to historian Peter Frankopan (who was once a speaker at the PwC Real Estate Client Conference) for flagging this particular Babur quote.

Before we return to alcohol, more serious matters. But perhaps to ease you into this, a mention of something that combines both. Last week's Estate Gazette podcast, in which Brewdog chief operating officer David McDowall explained why government and landlords need to do more to help tenants if the hospitality industry is to survive, is very much worth a listen. You can find it 
here. It also mentioned at least twice Brewdog's latest piece of inspired marketing, a new hazy IPA which they have named "Barnard Castle eye test" (see here). On the subject of inspired marketing, we also feel that retail consultant Graham Soult deserves a mention. He was hired by Durham City Council on 20th May to raise the profile of Durham. They have not gone with the angle we would have anticipated, but that is an impressive first couple of weeks.

The Association of Real Estate Funds (AREF) crisis series of webinars which John has been chairing have continued, and AREF have also last week published two pieces of work with which John has been heavily involved, the Cost Transparency Initiative and the AREF / INREV Open Ended Fund Pricing Consultation Paper. Details of these, and a bit more, below.

AREF Webinar: Crisis Forums #4

Webinar #4 took place on 19th May. Thank you to the panelists:

  • Anne Koeman-Sharapova, Principal European Real Estate at Mercer
  • Anne Copeland, Head of Specialist Funds, Real Assets Equity at Kames Capital
  • Alison Riddle, Partner, UK at Osborne Clarke
  • Nick Brown, Finance Director at M&G
You can listen to the webinar here.

One of the interesting points to come out of the discussion is that some managers of closed-ended funds that are coming to the end of their life are seeking extensions. At the moment these tend to be short-term extensions to avoid the immediate need to sell assets. During the discussion of this point, one of the panelists referred to the AREF/INREV/IPF report on the End of Fund Life from 2016 for which John was part of the working group. You can find the report
here. The report provided advice on best practice relating to the end of life period for closed-ended real estate funds, whether winding up, extending or converting to some other form of vehicle.

AREF webinar #5 will take place on 9th June. You can find details

Cost Transparency Initiative

As we have previously covered in this newsletter, the Cost Transparency Initiative (CTI) was launched in November 2018; it is an independent group supported by the Pensions and Lifetime Savings Association (PLSA), the Local Government Pension Scheme Advisory Board and the Investment Association (IA). It is a new industry standard for institutional investment cost data. John chairs AREF's CTI & Expense Ratio Working Group which is working with CTI to enable cost data for real estate funds to be recorded in a consistent and clear way on the templates and John sits as the property representative on the CTI Technical Expert Panel.

Last week AREF published a Q&A on the standard reporting template.

You can find the CTI website, which includes the templates

You can find AREF's background information on the CTI
here and the Q&A here

The group has been working on an updated version of the private equity template with property cost disclosure which has now been agreed and will be available to download from the CTI website shortly.

The remit of the Working Group is then to review and update the AREF Total Expense Ratio guidance, which John last reviewed in his AREF / INREV report "Cost Transparency in European Listed and Non-Listed Real Estate" in 2017. You can find this report 

Open Ended Fund Pricing

The AREF / INREV Open End Fund Pricing Consultation Paper has now been published. This is a follow-up to the original report that was published in 2018. John is part of the group that drafted the new consultation paper. The consultation paper, consultation questions and details of a webinar on 18th June on the consultation at which John is speaking can be found on the AREF website here. INREV members can find the information here.

An accounting point

John raised a point in April regarding funds that have an income distribution requirement, including UK authorised funds. Because of the way that rental income is accounted for over the life of a lease, significant rent deferrals or rent free periods may result in accounting income materially exceeding available cash for distribution. AREF is now taking this point forward and John will be part of the group looking at it.


The fourth and final Brexit Barnier / Frost negotiating round before the crucial 30th June deadline started yesterday. Our previous newsletter was just before the start of the third round. We outlined that the April negotiating round played out pretty much in line with our worst expectations, i.e. that it would get bogged down on fisheries, a topic that provokes patriotic fervour vastly in excess of its economic importance on either side of the Channel. The May negotiating round took place during the week starting 11th May, with both sides concluding afterwards that little progress had been made. The "level playing field" and fisheries continue to be the major stumbling blocks to any progress. 

As you may anticipate, we are not optimistic about this week's fourth and in theory final round of negotiations. The FCA are holding a roundtable today on Brexit no-deal preparations. We will be producing a more comprehensive blog on this once the current round is complete. This will be a new blog - we think we can resist the urge to "Dominic" an old one to make ourselves look more prescient. 

Although under the Withdrawal Agreement any request for an extension to the transition period has to be made by 30th June, there are, at least in theory, other ways to achieve this. For those who are interested in technical geekery, these are set out in some detail in an excellent Institute for Government paper published on Saturday. You can find it

EU taxation

In our last full newsletter, on 8th May, we included a brief update on the EU Directive on Administrative Cooperation (DAC-6), which applies from 1st July 2020. On 12th May, we circulated a very brief update that the EU Commission had announced an extension of the filing deadlines by three months. What needs to be reported does not change, so transactions from 25th June 2018 will still need to be reported. Reports for arrangements entered into from 25 June 2018 to 30 June 2020 which would have been due by 31 August 2020 will now be due by 30th November 2020.

Although the first wave of DAC-6 has yet to break on the beach, we notice that the European Commission's timetable includes the following for its meeting of 15th July 2020:

Anti-fraud tax package (tbc)

* Communication on an 'Action Plan to fight tax evasion and to make taxation simple and easy'

* Communication on 'Tax good governance in the EU and beyond'

* Revision of the Directive on automatic exchange of information – DAC-7 

We will let you know as soon we know more.

Transparency, governance and the housing minster

Many of you will have seen the recent press coverage of Robert Jenrick, the Secretary of State for Housing, Communities and Local Government, and the approval of an East End property development. The initial reporting by the excellent Louisa Clarence-Smith, property and professional services correspondent in The Times has now been followed up by a wide variety of other publications including an article in The Financial Times over the weekend by the equally excellent Jim Pickard, currently Chief Political Correspondent but formerly property correspondent so familiar with both sides of the affair.  The Times coverage is here and the Financial Times here.

We have not repeated all the background here, you can read it in the press. However, the following two brief paragraphs from the Financial Times coverage appear to us to be key:

"Tower Hamlets council tool legal action against Mr Jenrick, arguing that the timing of his decision appeared to show bias towards Mr Desmond, and asked the High Court in London to order the government to disclose all correspondence between the two sides.

After the court ordered Mr Jenrick's department to release the documents, the housing secretary accepted his approval of the Northern and Shell's planning application had been "unlawful by reason of apparent bias" and recused himself from any future involvement"

As longstanding campaigners for improved transparency and corporate governance in the real estate industry, we believe that this should start at the top with the Secretary of State. If he concluded that accepting that he had acted unlawfully was a better outcome than releasing the relevant correspondence, we believe that this merits further investigation and add our voice to those calling for an inquiry. 

Forthcoming events

John has a large number of forthcoming speaking engagements. He likes to think that this is because he is a font of knowledge on real estate funds, but we know it is really because people are enjoying the comedy value of somebody wearing a bow-tie. He has received a couple of requests to wear one that twirls and squirts water. Even John has more self-esteem than that. Forthcoming events are as follows:

AREF COVID Forum #5 - The Road to Recovery
9th June, 11.15am

As mentioned earlier in this newsletter, John will be moderating this webinar. Details and registration here.

Discussion on the merits of a proposed UK Professional Investor Fund
16th June, 9.15am

John will be speaking on this webinar hosted by Ocorian. Details and registration here.

AREF/ INREV Open End Fund Pricing Project Briefing Webinar
18th June, 10am

As mentioned earlier in this newsletter, John will be speaking on this webinar. Details and registration for AREF members here and for INREV members here.

ICAEW seminar - Covid 19 and real estate investment management
22nd June, 11am

This seminar is part of the Institute of Chartered Accountants in England and Wales Construction & Real Estate Community programme. John, and Nick Brown, Finance Director at M&G, will be speaking. Details are  available here. You can find more information about the ICAEW Construction & Real Estate Community here. We only recently discovered it, but it has a lot of good material so worth becoming a member (it is free) if you are a chartered accountant working in the industry.

Institute and Faculty of Actuaries webinar - Challenges of including illiquids in DC Pension Funds
9th July, 3pm

John will be speaking on this webinar. Details and registration here.

London Stock Exchange Investment Fund Conference 2020
4th September

As mentioned in our previous newsletter, John will be speaking about real estate funds at this conference, which has been postponed until 4th September, although it is not clear that physical conferences will have restarted by this date. You can find details and register here.

IPF webinar on open ended funds
15th September

John will be moderating this webinar. Details will be available shortly.

Historial trivia

As mentioned in the introduction, the history of booze is back. Thank you for your suggestions as to what to cover next, which we have decided to ignore and go with our own choice. An honourable mention does however go to Ettore Santucci from Goodwin for advancing a very spirited case for Grappa. Had it been accompanied by an actual case of spirit, it might have swung it. We have decided to go with a personal favourite that also opens up a number of winding side roads of trivia, Calvados. 

Calvados is the magnificent apple brandy from the Calvados department of Normandy. The department was named Calvados at the time of the creation of the original 83 departments in 1790. It was a bit of a close shave on the branding front as the original proposal was "Orne inférieure", which we feel would be more challenging from a marketing perspective. The actual derivation of "Calvados" is a bit of a mystery, but the most widespread view is that it was the name of one of the ships in the Spanish Armada that was wrecked on the coast there. A Spanish Armada historical trivia will also appear at some point. 

That is the place, what about the spirit? It is distilled from Normandy cider, a drink to which we are also extremely partial, particularly on a sunny June afternoon. Drawing once again upon the considerable wisdom of "the complete book of spirits" by Anthony Dias Blue, the first reference to "eau-de-vie de sydre" is in the journal of Gilles de Gouberville from 1533. He described how a young man from Touraine who was a guest in his house told him about how brandy was made from wine. Monsieur de Gouberville decided to have a go at distilling some of his cider and the rest, as they say, is history. It was only in the nineteenth century that people started calling it Calvados to distinguish it from eau-de-vie from elsewhere.

John has some experience in this field. He still has a pen-friend from school days in Normandy and has been visiting since he was a teenager. John's brother also owns a farmhouse near Pont-l'Évêque, famous as the home of the finest Calvados as well as the oldest cheese in Normandy, from the 12th century, thus pre-dating Camembert by a whole six centuries. We mention John's broad experience as the feedback on our earlier vodka trivia was that you valued helpful tips on the consumption of more rustic varieties of the spirit as much as the guidance on commercially available choices for the more sophisticated palate. For the former, may we introduce you to the splendid practice of Trou Normand ("Norman hole"). In a traditional and gargantuan Normandy dinner, every course of which is, of course, cooked in cream, butter or cheese, the Trou Normand is a shot of calvados served between courses to burn a hole through the previous course. Your between course "calva" should be a coarser calva than the after dinner variety.

The greatest calvados of all, which John was lucky enough to taste at friends in Normandy many years ago, was the liberation calvados of 1944. Local difficulties seriously limited production that year.

A trip to Calvados also provides an opportunity to take a detour onto one of our favourite historical figures from Calvados, Bishop Odo of Bayeux, half brother of William the Conqueror. In view of the topical but controversial question of bishops getting involved in politics, we think Odo is a splendidly hands-on precedent. He is also pertinent to the current debate on following the letter rather than the spirit of the law. In the case of Odo this was the prohibition on the use of weapons by the clergy. He took "it's not a weapon, just a stick" to "Barnard Castle eye test" levels of credulity stretching. We illustrate this with a picture from the Bayeux Tapestry of Odo out clubbing in Hastings. 

Just to conclude, although "Barnard Castle eye test" seems likely to become a permanent feature of slang, it has a historical precedent too. During the the Rising of the North of 1569, Sir George Bowes locked himself in Barnard Castle rather than face the revolting Catholics. Thereafter "Barnard Castle" became local slang for a pathetic excuse, although obviously in the case of Sir George it was an implausible excuse for staying inside rather than going out.

As usual, feel free to forward this email to others for whom it may be of interest.  If this message was forwarded to you, you can sign up to the mailing list here, and see the previous editions of this mailing here  You can unsubscribe from the list using the links at the bottom of this message.  Our privacy policy can be found here.

Helen Forbes
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