Current Developments for the Real Estate Industry€¦ · entitled “Non-GAAP financial measures...
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Current Developments for the Real Estate Industry Fall 2016
Transcript of Current Developments for the Real Estate Industry€¦ · entitled “Non-GAAP financial measures...
Current Developments for the Real Estate Industry
Fall 2016
Table of contents
I. An update on Non-GAAP financial measures for
registered real estate companies 1
II. In the market and recent real estate trends 5
III. Accounting and financial reporting hot topics 8
IV. Update on tax matters 11
V. Regulatory considerations – SEC 13
VI. Governance discussion 15
VII. Technology trends and update 17
VIII. Video perspectives 19
I. An update on Non-GAAP financial measures for registered real estate companies
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I. An Update on Non-GAAP Financial Measures for registered real estate companies
In June of this year, PwC released a “Real Estate Alert” entitled “Non-GAAP financial measures – a focus on publically registered real estate companies,” which focused on the U.S. Securities and Exchange Commission’s (SEC) recently released updated Compliance and Disclosure Interpretations (C&DIs). This document is intended to be an update to that previous release, as recent interpretive guidance has been communicated by certain members of the SEC’s staff.
On May 17, 2016 the SEC’s Division of Corporation Finance (CorpFin) published updated C&DIs specific to the use of non-GAAP financial measures by registrants in all external communications (filings, earnings releases, supplemental presentations, etc.). While the C&DIs do not amend SEC rules, they do provide further clarity into the SEC’s perspectives on how to apply the existing rules on the use of non-GAAP financial measures. Since the release of the C&DI’s, we have seen an increase in the number of comment letters focused on non-GAAP measures. Given the use of non-GAAP measures by registrants in the real estate industry, many have received such letters.
In the months since the C&DIs were published, many real estate industry stakeholders have thoughtfully assessed how the industry will be impacted to consider how best to properly implement the updated interpretations. While the SEC has not released any updates to the C&DIs, several high ranking SEC officials have recently commented on the continued use of non-GAAP measures during speaking engagements including industry specific events. These comments provide further insights into how the C&DIs should be interpreted.
On June 27, 2016, SEC Chair Mary Jo White, speaking at the International Corporate Governance Network’s
Annual Conference in San Francisco, reiterated the SEC’s growing concern regarding the use by public companies of non-GAAP financial measures. In her keynote address, Chair White commented that “in too many cases, the non-GAAP information, which is meant to supplement the GAAP information, has become the key message to investors, crowding out and effectively supplanting the GAAP presentation.” While companies are allowed to present non-GAAP financial measures in their public disclosures to enable them to “tell their own stories” to investors, Chair White voiced her concern that recently, companies have been “taking this flexibility too far and beyond what is intended and allowed by our rules.” Her comments have been echoed by other high ranking SEC officials including Wesley R. Bricker, the SEC’s Deputy Chief Accountant and Mark Kronforst, the Chief Accountant in the SEC’s Division of Corporation Finance.
Several insights with specific interest to real estate market industry participants were shared at the National Association of Real Estate Investment Trust’s (NAREIT) Senior Financial Officer (SFO) Conference on September 27, 2016, which was held in Denver, CO. A senior SEC staff member from CorpFin participated on a panel at the conference, where he and other panelists’ addressed a variety of topics related to non-GAAP financial measures and the C&DIs that are of specific interest to the real estate industry. While these views will not be formally released in SEC publications and are expected to permeate through the comment letter process, the highlights from his, and the other panelists’, remarks include the following:
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Analyst Feedback - When asked about their perspective to the changes in disclosure resulting from the C&DIs, the analysts on the panel generally indicated a positive view of the C&DIs as, from their perspective, companies have in select instances moved too far away from NAREIT’s definition of Funds from Operations (“FFO”). These analysts believe that the C&DIs will assist in moving companies back towards the NAREIT definition thereby achieving consistency across sectors and companies.
Registrant Perspective - Feedback from registrants has generally been that the most significant issue was addressing prominence, but that this was straightforward and well understood. While the guidance is clear that registrants may present FFO as defined by NAREIT, with respect to other matters (i.e., presentation formats and other adjustments such as AFFO), most Companies are seeking additional interpretive guidance with respect to how the C&DIs will be interpreted before making incremental changes to non-GAAP financial measure presentation formats and definitions (for example AFFO, as discussed further below).
Pro Rata Consolidation – Pro Pro rata statements and pro rata consolidation was discussed as a violation of the C&DIs based on “prominence” and “tailored accounting principles”. Specifically, presentation of full financial statements on a pro rata basis was viewed as an “alternative GAAP” basis of accounting. The SEC panelist conveyed that these presentation formats should be removed and that relying on certain GAAP-guidance as a basis for presenting such information (e.g., ASC Topic 280, Segment Reporting) is not a sufficient basis for inclusion. The Staff conveyed that they are open to further discussions with registrants and others regarding the most appropriate methodology to convey this information to investors. Subsequent to this discussion, on September 30, 2016, NAREIT released an SFO Alert providing for a solution in respect of pro rata presentations. The alert indicates that companies may provide both pro rata information for a company’s share of unconsolidated ventures as well as the non-controlling interest share
of consolidated ventures on a schedule, without providing totals or a presentation method that provides a full non-GAAP income statement. The alternative presentation was described as having been discussed with the SEC Staff.
Acquisition Costs as AFFO/MFFO Adjustments - With With respect to recurring cash operating expenses, the SEC panelist commented that one adjustment that registrants in the real estate industry should consider the appropriateness of, based on their facts and circumstances, is the exclusion of acquisition expenses in adjusted FFO (AFFO) which is used by traditional traded REITs, modified FFO (MFFO), which is defined by the Investment Program Association (IPA) for use by Non-Traded REITs, and other similar measures given that most real estate companies have recurring acquisition activity. With respect to the C&DIs regarding inconsistency of adjustments each period, registrants should have processes to identify comparability matters and instances of adjustments being inconsistently applied and should avoid cherry picking (e.g., only including adjustments when they are advantageous).
Tailored Accounting Principles - With respect to the C&DI that highlights the substitution of individually tailored revenue recognition and measurement methods to non-GAAP versions, the SEC panelist conveyed that the SEC is not solely focused on tailored measures of revenue. Rather, consistent with the C&DI, they are focused on tailored measures of all GAAP line items. Real estate examples given, in addition to pro rata consolidation, included straight-line rent and above- and below-market lease amortization (resulting from the amortization of purchase price allocations in accordance with ASC 805 which affect revenue) in adjusted FFO computations and altering the timing of how incentive fee revenue and expense are reflected. The SEC panelist commented that it is unlikely that there will be any future formal release from the SEC providing for their definitive views on this topic in the near term. Rather, they will each be addressed via the comment letter process and, accordingly, this area is likely to evolve in the coming months.
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Non-GAAP Measures on a Per Share Basis – The SEC panelist communicated that the C&DIs related to liquidity measures and per share information could impact adjusted FFO and funds available for distribution measures, where the adjustments made from FFO closely track those made to adjust from net income to operating cash flow. If viewed as a liquidity measure, in addition to disallowing the presentation on a per share basis, the reconciliation to the most relevant GAAP measure would be Cash Flow from Operations rather than Net Income. One challenge the SEC panelist highlighted that they are working through is how to think about differences in reconciling items between periods where the adjustments in one period are non-cash and cash in another period. While the SEC has not formulated a specific view, the panelist commented that they do not expect a registrant to change from period to period.
Subsequent to the SFO Conference, several registrants have received comment letters on the issues discussed at the SFO conference. The key themes from these letters were as follows:
Questioned certain adjustments to arrive at AFFO, and requested additional information as to why the registrant believed that AFFO was not a liquidity measure in the disclosed context. Additionally, the SEC inquired why this measure was presented on a per share basis.
Questioned adjustments for the non-GAAP pro rata balance sheet and income statement for the registrant’s proportionate share of economic ownership of each asset in the portfolio that is not wholly owned, and challenged that this inappropriately substituted an individually tailored accounting principle for one based in GAAP.
Noted observations that certain earnings releases focus on key non-GAAP financial measures with greater prominence than the GAAP financial measure, and requested prospective changes.
Certain requests were made to explore whether measures that were not previously disclosed as non-GAAP, were in fact non-GAAP, and therefore should be disclosed as such.
Other requests were made for further information related to line items used to reconcile the GAAP measure to the non-GAAP measure, with a view that more transparency was needed to give stakeholders clarity around the reconciliation.
As this is an evolving space, it is one to watch closely in the coming months. The updates to the C&DIs were released in May, and subsequent to the calendar year second quarter filings we saw significantly increased comment letter activity, along with a significant amount of commentary from the SEC provided through speaking engagements. The SEC has signaled that no further updates to the C&DIs are expected in the near future, and thus implementation guidance will likely come in two forms: 1) Public commentary provided through speeches and 2) the comment letter process. We will be watching both closely, and will provide further updates as necessary.
II. In the market and recent real estate trends
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II. In the market and recent real estate trends
1. Why advancing densification of US office space is opening up a new era of opportunity and creativity for developers
About a decade ago, commentators on the US real estate market began highlighting a trend among corporates toward a leaner real estate footprint for their office space. This focus on “densification”, intensified through the recession– and, without question, continuing today – brings what I believe are new and increasingly disruptive implications for developers and landlords striving to attract, retain and meet the future needs of corporate office tenants.
So, what’s happened to office space? An unprecedented array of influential drivers – dominated by technological innovation, economic pressures and radical changes in work culture – have come together to drive down the square feet allocated per person in the average corporate office, especially in urban centers with relatively high rents.
Refer to PwC’s US asset management blog to learn more about why advancing densification of US office space is opening up a new era of opportunity and creativity for developers.
2. Trading insecurities: How US asset management firms can prepare for Brexit
On June 23, 2016, the UK voted to leave the European Union. The economic and political implications will be significant and long-lasting, and not just for the UK and the EU. The repercussions will be felt far and wide, including by US asset and wealth managers. The specifics of how the UK will exit the EU will be the subject of negotiations for at least the next two years.
PwC first prepared a paper, “Not just across the pond: How US financial institutions prepare for Brexit,” which discussed the broader implications of Brexit including how we ended up here, likely exit scenarios for the UK, and their impact on US financial institutions. We examined these scenarios through their possible effects on key business functions. In this paper, PwC continues to focus on the effect Brexit could have on asset and wealth management firms within the United States. In other publications, we dig deeper into other financial services sectors, including banking and capital markets, insurance, and commercial real estate which are included on PwC’s Brexit: What now for US Companies?, webpage.
Learn more how Brexit will impact US asset and wealth management firms and what you can do now to prepare within the PwC US asset management publication “Trading insecurities: How US asset management firms can prepare for Brexit.”
3. US Asset and Wealth Management Deals insights
Deal activity in the asset and wealth management industry during the first half of 2016 remained strong but slowed down slightly compared to last year when we had seen a record number of announced transactions. The total number of announced deals in this period was 11% lower compared to both H1 2015 and H2 2015, but still exceeds the levels seen prior to the financial crisis. The total disclosed deal value in H1 2016, excluding $1bn+ deals, was flat compared to H2 2015 but significantly stronger than H1 2015, driven by a fewer but high value disclosed deals. Total announced deals in the alternative asset management sub-sector increased 78% compared to H1 2015 and 7% compared to H2 2015. This growth was driven by strong deal activity involving private equity targets, reversing the slowdown seen in 2015.
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On the contrary, we saw a large slowdown in both mutual fund and wealth management deals. Total announced mutual fund deals decreased by 38% compared to both H1 2015 and H2 2015, while wealth management deal volumes decreased 5% compared to H2 2015 and 16% compared to H1 2015. The decrease in the wealth management deals was expected, as the deal volumes had increased almost threefold in 2015. As noted in our 2015 paper, “Reaching New Heights”, macroeconomic conditions, both globally and in the US, have impacted deal activity, as financial institutions continue to grapple with slowing global growth, volatile equity markets, continued pressure in the energy and commodities markets.
To learn more about deal activity in the asset and wealth management industries, please refer to the PwC US and Wealth Management Deals insights.
4. A percentage of taxable income recognition rules remain incomplete for condo developers
For the past 30 years, developers of high-rise condominium projects (“Sponsors”) have had to grapple with tax rule (the “percentage of completion method”) that would require income to be recognized in connection with the sale of condominium units prior to the transfer of title to customers (“Buyers”). If required to use the percentage of completion method, Sponsors often need to pay income taxes based on income projections prior to the completion of the project. Each year’s taxable income is computed by multiplying an estimate of the expected gross profit on each executed pre-sale agreement by the percentage of costs incurred. This tax liability can be an additional cash drain for Sponsors on projects that are already very capital intensive.
PwC has observed a recent resurgence of interest around the topic taxable income recognition rules surrounding condo developers. We believe that there are several worthwhile positions that should be carefully explored with a competent tax advisor in the context of each project’s unique set of facts and circumstances. PwC has prepared an article which summarizes the often cited arguments employed to avoid the requirement to apply the percentage of completion method in the context of high-rise condominiums.
Refer to the PwC Real Estate Insights Publication to learn more about these often cited arguments.
III. Accounting and financial reporting hot topics
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III. Accounting and financial reporting hot topics
1. FASB finalizes guidance to simplify elements of cash flow classification
On August 26, 2016, the FASB issued Accounting Standard Update 201615, Statement of Cash Flows (Topic 230), a consensus of the FASB’s Emerging Issues Task Force. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. Please see the June 2016 EITF observer for more information.
PwC has prepared a brief article which summarizes the issues addressed in the new guidance, including but not limited too;
Debt prepayment or debt extinguishment costs
Settlement of zero-coupon debt instruments
Contingent consideration payments after a business combination
Distributions received from equity method investments
Beneficial interests in securitization transactions
Please refer to the PwC In brief for additional information on the potential impact of the new guidance on your company as well the effective dates of the new guidance.
2. New FASB credit loss guidance affects financial assets
The FASB issued new guidance that introduces a current expected credit loss (CECL) model for the recognition of impairment losses on financial assets (including trade receivables) measured at amortized cost and certain off-balance sheet credit exposures. It also modifies the impairment model for available-for-sale (AFS) debt securities. This guidance is not converged with the IASB’s credit loss model (IFRS 9), issued in 2014.
The CECL model replaces current GAAP’s incurred loss model. Under CECL, companies will record an allowance through current earnings for the expected credit loss for the life of the financial asset—such as a trade receivable, loan, or held-to-maturity security—upon initial recognition of the financial asset. Incorporating forecasts of expected credit losses when estimating the allowance is something not permitted under current GAAP. This approach will also need to be applied to certain off-balance sheet credit exposures, such as loan commitments.
The modified impairment model for AFS debt securities retains much of the current model (known as the “other-than-temporary-impairment model”). However, there are several changes, one of which requires credit losses to be recorded through an allowance that can be reversed if credit loss estimates improve. The standard also introduces new guidance for purchased financial assets with credit deterioration and beneficial interests in securitized financial assets.
Please refer to the PwC Quarter close Third Quarter 2016 or In Depth for more information on the FASB’s new credit loss guidance and how it financial assets.
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3. PwC “10 Minutes” on the new US lease standard: How the new rules will bring changes to your financial statements
As companies begin to digest the new lease accounting standard from the Financial Accounting Standards Board (FASB), we take a look at the implications on financial statements. Leases are a way to use property or equipment and pay over time. Today, operating leases are off-balance sheet, but the new guidance reflects operating leases with terms greater than one year on the balance sheet with both an asset (the right to use the leased item) and liability (the obligation to make lease payments), similar to capital leases today.
Terminology is changed; today’s capital leases are tomorrow’s finance leases. But classification–whether a lease is operating or finance–is largely the same. PwC has prepared a summary of how the new guidance may impact your business and implications on financial statements, and further discusses benefits and drawbacks of adopting the lease standard concurrent with the new revenue standard. Please refer to the PwC 10Minutes for additional reference.
4. Hedge accounting: significant changes exposed for comment
On September 8, 2016, the FASB issued a proposed Accounting Standards Update to ASC 815 (Derivatives and Hedging). The proposed guidance will impact the hedge accounting guidance for both financial and nonfinancial hedging relationships. The goals are to improve the alignment between hedge accounting and a reporting entity’s risk management objectives and to simplify hedge accounting for preparers. The proposed guidance, if finalized, will significantly change what qualifies for hedge accounting, how it is documented, how hedge effectiveness is assessed and hedge ineffectiveness is measured, and how the hedging results are presented and disclosed in the financial statements.
Please refer to the PwC In brief to learn more about the proposed hedge accounting and derivatives guidance.
IV. Update on tax matters
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IV. Update on tax matters
1. Final regulations on the definition of real property for REITs
On August 31, 2016, the IRS released final regulations (“Final Regulations”) to clarify the definition of “real property” for purposes of the asset tests applicable to real estate investment trusts (“REITs”). The Final Regulations generally follow the proposed regulations, released on May 14, 2014 (the “Proposed Regulations”), although there are certain important changes from the Proposed Regulations. The most important changes from the Proposed Regulations include:
i. clarification that assets that serve as a conduit or route for transport will be treated as serving a passive function for purposes of determining if the asset qualifies as an inherently permanent structure;
ii. the removal of the requirement that a REIT have an equivalent interest in an asset and an inherently permanent structure for the asset to be treated as a structural component and instead requiring that the REIT must have a real estate interest in the inherently permanent structure;
iii. that in some cases, with respect to the sale of energy to a utility (e.g., the sale of excess energy generated from solar panels), such sales will not cause the energy system to be treated as anything other than a structural component, and that the income generated from the sale would not be gross income to the REIT for purposes of the REIT income tests. In these instances, net income derived from the sale of excess energy would not be treated as net income from a prohibited transaction;
iv. the requirement that GAAP intangibles that relate to both rent and services be allocated between real property and non-real property assets; and
v. an explicit note in the preamble that private letter rulings inconsistent with the Final Regulations are revoked prospectively.
Please refer to the PwC Real Estate Tax Alert for additional reference to the final regulation released by the IRS on the definition of real property for REITs.
2. Practical implications of TEFRA partnership audit rules repeal: Issues to consider now
Recently released temporary regulations (T.D. 9780) provide guidance for electing to apply the new partnership audit rules for partnership tax years beginning after November 2, 2015. (See Tax Insights from Mergers and Acquisitions, Temporary regulations address election into new partnership audit regime (Aug. 8, 2016); see also Tax Insights from Washington National Tax Services, New law makes significant changes to partnership audit and adjustment procedures (Nov. 5, 2015).
Absent an election of earlier application, the new partnership audit rules take effect for tax years beginning in 2018. Under the new rules, the IRS generally will collect tax at the partnership level on adjusted partnership items at the highest corporate or individual rate in effect for the audited year.
This tax, however, is likely to be the ‘wrong’ amount and is likely to be borne by the ‘wrong’ partners. As discussed below, the statute offers partners some limited ways to right these wrongs — or possibly opt out entirely — but partners need to understand these exceptions well before an audit — even before acquiring an interest in a partnership — to take advantage of them.
The new partnership audit rules, enacted in 2015, raise many practical and technical questions that have yet to be answered. Significant administrative guidance and possibly Congressional action to supplement the new rules are expected. Given the delayed effective date and need for clarifying guidance, many partnerships have not yet analyzed the significant practical implications of the new rules. Prior to the effective date, however, partnerships and partners need to respond to the rules in their current form. We believe that it is advisable to start focusing on the impact of the new rules and plan accordingly.
This PwC Tax Insights takes an in-depth look into what partnerships and their partners should be doing before the new rules take effect.
V. Regulatory considerations – SEC
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V. Regulatory considerations
SEC
1. SEC scrubs disclosure requirements
In July, the SEC proposed amendments to update certain disclosure requirements due to changes in US GAAP, IFRS, other SEC disclosures, or to reflect changes in technology. The proposals are the result of the SEC’s disclosure effectiveness initiative.
The proposed amendments include recommendations to:
eliminate duplicative requirements that provide substantially the same disclosures as US GAAP;
eliminate overlapping disclosures that convey reasonably similar disclosures or disclosures that may no longer be useful to investors;
integrate certain disclosures that overlap with, but require information incremental to, other SEC disclosure requirements; and
modify or delete outdated or superseded provisions, which in some cases may mean adding new reporting requirements.
The proposed amendments reference numerous examples of the types of disclosures that may be impacted. For instance, both Regulation S-K and ASC 260 require disclosure of the computation of basic and diluted earnings per share in annual filings. Likewise, both Regulation S-K Item 101 and ASC 280 require disclosure of certain segment financial information.
For additional information on the SEC proposed amendments, please refer to “The quarter close: Directors edition Q3 2016” or PwC’s In brief.
PCAOB
2. Re-proposed changes to enhance the auditor’s report
In May, the PCAOB re-proposed an auditing standard, The Auditors Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, and related amendments that would require additional information in the auditor’s report about the audit and the auditor. The proposed standard retains the existing “pass/fail” opinion but includes a requirement for the auditor to report critical audit matters (CAM) in the auditor’s report.
Under the re-proposal, CAM are any matters arising from the audit of the financial statements communicated, or required to be communicated, to the audit committee that; (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved especially challenging, subjective, or complex auditor judgment. The auditor’s report would (1) identify the CAM; (2) describe the principal considerations that led the auditor to determine the matter is a CAM; (3) describe how the CAM was addressed in the audit; and (4) refer to the relevant financial statement accounts and disclosures. Refer to our In brief for more details on the re-proposal, including reporting of tenure and other proposed changes to the auditor’s report.
In August, we submitted our comment letter on the re-proposal. We supported changes to the auditor’s report that will be responsive to the feedback provided by users while also maintaining or improving audit quality. Portions of the re-proposal have garnered mixed views in responses received by the PCAOB, including (1) the proposed definition of a CAM, including whether they should be limited by materiality and whether the auditor should report original information about an entity, and (2) reporting auditor tenure within the auditor’s report. There is currently no effective date for the re-proposal.
Refer to PwC’s September 2016 Regulatory and standard-setting developments publication for reference to PwC’s comment letter as well as a summary of other activities of the FASB, PCAOB, and SEC.
VI. Governance discussion
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VI. Governance discussion
1. Getting the most out of internal audit: How can the audit committee help maximize the value of internal audit
As audit committees face a wider range of business risks and increased expectations from stakeholders, many audit committees are turning to a particular resource—the internal audit function. Internal audit (IA) can be viewed by committee members as an objective insider—one that can serve as their eyes and ears.
Maximizing the value proposition of the internal audit group is an effective way to help audit committees address their risk oversight responsibilities. However, getting full value from the function isn’t easy: 62% of stakeholders expect more value from internal audit, according to PwC’s 2016 State of the Internal Audit Profession Study.
PwC has outlined how audit committees can get the most out of internal audit within its PwC Governance Insights Center “Getting the most out of internal audit” publication.
2. Exploring an IPO: the 9 ½ questions board should ask
Continuing challenges in the capital markets have a big impact on what management should do- and what boards should ask about- when contemplating an IPO. Taking a company public is a big deal. But market volatility, geopolitical uncertainty, and stalling valuations continue to impact the IPO landscape. So yesterday’s experience doesn’t always help you address today’s challenges. PwC has prepared a publication discussing the critical questions boards should ask before taking a company public.
You’re sitting on the board of a private company that’s planning to go public, and that idea keeps you up at night. You’re not alone. Taking a company public is no small feat. It can transform the way the company does business. The process can be time-consuming, costly, and confusing. It can also be enormously rewarding as a key milestone in a company’s evolution. The key to success in navigating your IPO is to start early. That is, 12 to 18 months before an IPO kickoff meeting with underwriters, a board should ask management about its plans to get through the IPO and for what happens once you’re a public company.
To learn more about the challenges in the capital markets and what management and boards should ask in contemplating an IPO, please refer to the PwC September 2016 Governance Insights publication for additional reference.
VII. Technology trends and update
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VII. Technology trends and update
1. Beyond automated advice: How FinTech is shaping asset and wealth management
Asset and wealth managers (AWMs) who want to win in the redesigned market must find the right mix of technological improvements coupled with an adequate pricing structure. Conversely, turning a blind eye to shifting market expectations and ignoring the quick and imminent rise of innovative products, services and business models can be dangerous. Those who cling to business as usual, focusing on manual operations, pure investment management and siloed client data, should expect their market share to diminish at an increasing pace.
But with threats properly addressed, AWMs who adopt a technology-focused strategy and incorporate FinTech solutions will visibly strengthen their market position. A vast majority of AWMs view the impact of FinTech predominantly as the need to adapt to changing customer needs, and half of the survey participants–more than in any other financial sector–think new entrants can enhance interactions and help build trusted relationships.
Collaboration with FinTechs is crucial and will be the only way for the traditional firms to deliver technological solutions at the speed expected by the market. New entrants create tangible opportunities for incumbents to improve their traditional offerings. Going forward, traditional players need to prioritize these types of investments.
To learn more about these trends, PwC has prepared a Global FinTech Survey which discusses further how FinTech is shaping asset and wealth management.
2. Tech breakthroughs megatrend: how to prepare for its impact
How can c-suites even begin to make sense of the swirl of technological breakthroughs affecting business today? That’s the kind of question that CEOs are much more likely to get these days from some board members. It’s rarely a comfortable question—whether it’s actually about artificial intelligence or any of dozens of fast-developing technologies, and whether it is asked conversationally or out of serious strategic concern.
Given the sheer pace and acceleration of technological advances in recent years, business leaders can be forgiven for feeling dazed and perhaps a little frustrated. When we talked to CEOs as part of our annual Global CEO Survey, 61% of them told us they were concerned about the speed of technological change in their industries. Sure, more and more C-suite executives are genuinely tech-savvy—increasingly effective champions for their companies’ IT vision—and more and more of them know that digital disruption can be friend as well as enemy. But it’s fair to say that most struggle to find the time and energy necessary to keep up with the technologies driving transformation across every industry and in every part of the world.
To help CEOs on their technology journeys, PwC has been evaluating more than 150 technologies globally and developing a methodology to help identify the ones most pertinent to a given company or industry. Additionally, PwC has been filtering for those that will have the greatest impact on the widest range of industries over the coming years.
Please refer to the PwC Tech Breakthrough megatrends publication which shines the spotlight on those eight technologies that we contend will be the most influential on businesses worldwide in the very near future—the ones we call the “Essential Eight.”
VIII. Video perspectives
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VIII. Video perspectives
We are excited to tell you about the launch of 7 Day Yield, a new platform to showcase the thought leadership and point of view of the asset and wealth management practice. These video perspectives air weekly on PwC's YouTube channel and feature a wide variety of topics and spokespeople (including clients) across our sector.
1. Investor sentiment on real estate, plus a healthcare private equity firm
In this episode, PwC US Real Estate Leader Byron Carlock discusses investor sentiment towards the real estate market in Europe post-Brexit; plus CFO Jonathan Isler of Deerfield Management shares some insights behind managing different businesses and assets within his healthcare private equity business.
Please follow the link Investor sentiment on real estate, plus a healthcare private equity firm to learn more.
2. Disruptive technology and REITs
In this episode, PwC’s Global Financial Services Technology Leader, Julien Courbe talks about disruptive technology in the asset and wealth management industry, plus PwC Principal David Leavitt explains what a REIT is and the growing popularity in this investment vehicle.
Please follow the link Disruptive technology and REITs to learn more.
3. Economic indicators and Brexit
In this episode, PwC Research and Analysis Leader, Chris Benko, provides an update on the global economy and explains the story behind the growth numbers; plus, PwC US Financial Services Leader, John Stadtler, does a deep dive on the impact of the Brexit vote and the issues facing organizations in and outside of the UK.
Please follow the link Economic indicators and Brexit to learn more.
4. Shareholder activism and Brexit
In this episode… Paula Loop, Governance Insights Center Leader for PwC, discusses shareholder activism and the impact on mutual funds, hedge funds and their investors; and Andy O'Callaghan, European Asset Management Leader for PwC, discusses the potential impact on the UK if it exits from the European Union.
Please follow the link Shareholder activism and Brexit to learn more.
© 2016 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
Contact information
Byron Carlock
US Real Estate Leader
(214) 754 7580
Tapan Nagori
US Real Estate Business Advisory Leader
(312) 298 3574
Tim Conlon
US Real Estate Clients and Markets Leader
(646) 471 7700
Brian Ness
Partner, Real Estate Assurance Practice
(646) 471 8365
Richard Fournier
US Real Estate Assurance Leader
(617) 530 7168
David Voss
US Real Estate Tax Leader
(646) 471 7462
Jeff Kiley
Private Real Estate Equity Leader
(646) 471 5429
Tom Wilkin
U.S. REIT Leader
(646) 471-7090
