FTSE EPRA/NAREIT Global Real Estate Index Series – Ground Rule
Update21 July 2017
FTSE Russell would like to inform clients of the following update to the FTSE EPRA/NAREIT Global Real
Estate Index Series Ground Rules which are effective immediately.
Section 4: Eligibility Criteria
4.7

The following are not considered relevant real estate activities:
A.

The financing of real estate.

B.

The provision of construction management, general contracting and project management
services.

C.

The provision of property management, facilities management, insurance, power supply,
brokerage, investment management funds and services.

D.

Holding companies are excluded from the index. Holding companies are defined ascompanies that have more than 50 percent of their net assets invested in the securities ofother listed companies.

E.

Storage caverns/units for commodities such as oil & gas.

F.

Companies for which the ownership of real property is incidental to the primary revenue
generating activities, including those companies in the gaming, theme park and otherentertainment businesses.

G.

Infrastructure assets, including transportation assets (roads, bridges, tunnels, airports,etc.), energy and utilities assets (power generation, fuels, etc.), water and waste
management assets and communication assets (line-based networks, air-based networks,etc.) and prisons.

H.

Timberland and farmland.

I.

Outdoor advertising.

J.

Data center revenues labelled colocation will be considered real estate revenues
for the purpose of the EBITDA screen only if the information is provided in
sufficient detail to ensure that revenues from ineligible activities are not included.

4.8

The constituents of the FTSE EPRA/NAREIT Global Real Estate Index Series are required to meetall of the following criteria where applicable:A.

A company may only be added to the FTSE EPRA/NAREIT Global Real Estate Index Series if
it provides an audited annual report in English*. This is defined as a current set of accounts
in English consisting of a profit and loss statement, a balance sheet, directors’ review andfull notes to the accounts.

* Audited fiscal reports in Japan in English are also eligible. Reporting
requirements in the United States are such that official announcements or filings
may be used in addition to annual reports for US companies only, in exceptional
circumstances.
B.

If a company newly introduces English annual reporting it becomes eligible for the indexes
at the next quarterly review, providing it meets all other index inclusion criteria.

C.

Existing index constituents are required to produce an eligible annual report, as defined byRule 4.8A, within 12 months after its fiscal year end. Companies that fail to do this will
become ineligible at the next quarterly review.

D.

If a company meets the EBITDA criteria based on its latest annual report (Rule 4.8A), itbecomes eligible for the indexes at the next quarterly review, providing it meets all otherindex inclusion criteria.

E.

If a company fails the EBITDA criteria (see Rule 4.5), it becomes ineligible for the indexes at
the next quarterly review.

F.

In circumstances where annual reports are published within 20 business day of the review
cut-off date, consideration for index inclusion may be deferred until the subsequent review
to allow sufficient time for the full analysis of the information provided.

G.

A prospective constituent that derives more than 25% of its total annual EBITDA
from Frontier or standalone markets (as classified by FTSE Russell) will not be
eligible for inclusion in the FTSE EPRA/NAREIT Global Real Estate Index Series.

See Appendix 9 for the Eligibility Criteria of Speciality Indexes.
4.9

Assignment of Nationality

4.9.1

The nationality assigned to constituents of the FTSE EPRA/NAREIT Global Real Estate
Index Series will generally be the same as that assigned by FTSE Russell in theconstruction of the FTSE Global Equity Index Series. Details can be accessed using thefollowing link:
Determining_Nationality.pdf<http://www.ftse.com/products/downloads/Determining_Nationality.pdf>

4.9.2

A prospective constituent, which would otherwise have been assigned a nationality of aDeveloped market, that has over each of the previous two years derived less than 75%
of its total annual EBITDA from Developed markets (as classified by FTSE Russell) will
instead be assigned the nationality of the Emerging market (as classified by FTSERussell) from which it has derived the greatest percentage of its EBITDA over those
two years. Prospective constituents that have only one year of audited financialstatements in their latest annual report (as defined by Rule 4.8A) or English IPO
prospectus will be reviewed and classified based on the most recent available one year
audited financial statements.

4.9.3

An existing constituent which has previously been assigned a nationality of a
Developed market that has over each of the previous two years derived less than 50%of its total annual EBITDA from Developed markets (as classified by FTSE Russell) will
be assigned the nationality of the Emerging market from which it has derived thegreatest percentage of its EBITDA over those two years.

4.9.4

A constituent whose nationality was determined by the application of Rules 4.9.2 or
4.9.3 above may have its nationality changed to that of a different Emerging market iffor two consecutive years the greatest percentage of its EBITDA is derived from that
Emerging market.

4.9.5

A constituent whose nationality was determined by the application of Rules 4.9.2 or4.9.3 above may have its nationality changed to that assigned in the FTSE Global Equity
Index Series if for two consecutive years the company derives more than 75% of its
EBITDA from Developed markets.
An updated copy of the FTSE EPRA/NAREIT Global Real Estate Index Series Ground Rules (v7.8) is now
available on the FTSE Russell website : www.ftserussell.com

For further information please contact FTSE Russell Client Services at info@ftserussell.com or call:
Australia
Hong KongJapanLondon
New York+1800 653 680+852 2164 3333
+81 3 3581 2764
+44 (0) 20 7866 1810
+1866 551 0617

Alternatively please visit our website at www.ftserussell.com

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