Northern Trust is offering clients daily independent valuations for complex over-the-counter property derivatives.
The product, which has been developed in response to an increasing trend for property funds to use OTC derivative instruments, is the latest in a series of enhancements to the suite of services Northern Trust offers real estate fund managers.
The product enables a transparent, daily independent valuation for complex Investment Property Databank swaps. IPD is one of the most common benchmarks used for writing property derivative contracts in the UK and covers approximately 10,986 directly held UK property investments valued at around GBP117bn.
"Property derivatives are notoriously difficult to value and as a result are written based on a real estate property index, such as the IPD index," says Sascha Calisan, real estate fund administration product manager at Northern Trust.
"Our ability to now deliver independent valuations for IPD swaps on a daily basis is great news for the real estate industry, as typically the market data for daily valuations is sourced on a daily basis – a challenging task in what is still an illiquid market with few brokers – and is only publicly published once a month."
