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By John Manganaro editors@plansponsor.com | July 07, 2016
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DCREC Publishes Investing Checklist for Plans

The Defined Contribution Real Estate Council (DCREC) has published a checklist for use by defined contribution (DC) plan sponsors and consultants considering the addition of private real estate as an investment option in their plans.

DCREC describes the checklist as an “evaluation tool created to help plan sponsors and their partners in evaluating private real estate options that could be incorporated into their plan’s overall investment structure.” The checklist incorporates a wide range of recommended questions on topics such as daily valuation, liquidity, investment strategy, product structure and investor eligibility, as well as the operational considerations involved in implementing private real estate strategies on existing record-keeping platforms. 

“Plan sponsors and their consultants continue to seek diversified portfolio options for their participants,” says Jackie Hawkey, who co-chairs DCREC’s Best Practices Committee. “Interest is growing in allocating to private real estate for uncorrelated diversification, often within customized target-date funds or as part of a multi-asset class portfolio. The purpose of this checklist is to give market participants a standard set of questions to ask product providers when considering adding the asset class. This will make it easier to assess and compare offerings to determine the best fit for a particular plan.”

Additionally, DCREC released a research paper on the “Ten Key Principles Recommended for Daily Valuation of Private Real Estate Investments.” DCREC says the publication is a guide to understanding best practices in valuation covers topics such as incorporating third-party appraisals, establishing an objective daily valuation process, recognizing the impact of material events, and using currently accepted methods for daily valuation.

“Daily valuation and liquidity are seen as two of the biggest areas of focus for DC sponsors who want to add private real estate as an investment option in their plans,” Hawkey concludes. “Together, our checklist and guide provide an excellent starting point for anyone hoping to learn more about how they can incorporate this important asset class into a DC platform.”

More information on both resources can be found be at www.dcrec.org.

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