# Asset Management Reporting Standards

> **What this is:** This KB captures institutional reporting standards. Consumed by: Variance Analyst, Quarterly Asset Review Writer.
> **How to use it:** Load this knowledge base alongside the `monthly-variance-analyst` and `quarterly-asset-review-writer` skills, or consult it as a standalone reference when packaging multifamily operating performance for institutional LP consumption.

A comprehensive reference for the structural conventions, cadence rules, KPI checklist, variance-packaging norms, commentary-to-table ratios, length norms, waterfall disclosure expectations, and ESG/DEI reporting asks used by sophisticated institutional limited partners reviewing quarterly and monthly multifamily operating reports. These standards reflect the conventions of ILPA, NCREIF-PREA, the major public multifamily REITs (AVB, EQR, CPT, MAA, ESS, UDR), and observed institutional GP practice circa 2024–2026.

**Authority rule.** This KB does NOT redefine KPI formulas, variance-bucket decision rules, or line-item definitions that already exist in `research/asset-management/_taxonomy-seed.md` or `knowledge/multifamily-benchmarks.md` or `knowledge/underwriting-calc.md`. Every KPI reference is by cross-reference. Every standard in this KB cites one of the Phase 0b research notes R2 (Monthly Variance Analyst) or R9 (Quarterly Asset Review Writer).

---

## LP Report Cadence

Institutional multifamily reporting follows a four-tier cadence. Each artifact has a distinct audience, length, and content scope; none substitutes for the others.

| Artifact | Cadence | Typical Lag | Length | Audience | Content Scope |
|---|---|---|---|---|---|
| **Monthly Flash Report** | Monthly | 10–15 business days after month-end | 1–3 pages | GP internal + LP optional | Unaudited actuals vs budget on headline KPIs (occupancy, collections, NOI variance). Dashboard only. Not a substitute for the QAR. |
| **Quarterly Asset Review (QAR / QOR)** | Quarterly | 30–60 days after quarter-end | 8–12 pp stabilized / 15–20 pp value-add | Institutional LP (primary) | Full narrative + tables. Thesis status, performance snapshot, KPI dashboard, variance commentary, leasing, capital projects, market update, risks, financial position, forward-look. |
| **Annual Audited Financials** | Annual | 90–120 days after fiscal year-end | Variable | LP + lender + auditor | GAAP-audited operating and balance-sheet statements with fair-value and ASC 842 disclosures. Carries audit-season reconciliation mechanics against the Q4 QAR. |
| **Annual Asset Plan / Budget** | Annual | Delivered in Q4 for the following fiscal year | 15–40 pp | LP + GP | Forward-looking business plan and operating budget for the upcoming year. Becomes the approved baseline against which the following year's monthly variance packages and quarterly QARs are measured. |

**Cadence notes** (R9):
- The QAR is the only recurring deliverable where narrative commentary carries equal weight to numbers. A QAR that is all tables and no commentary fails the LP's basic test; a QAR that is all commentary and no tables fails the other half.
- The monthly flash report is not a mini-QAR. Do not expand it with narrative; keep it to headline KPIs and a one-line variance note per material line.
- The Q4 QAR (delivered Feb–March) and the annual audited financials (delivered April–May) must reconcile; any subsequent-events footnote or audit-adjustment reclassification belongs in a "Reconciliation to Audited" footnote in the following Q1 QAR.

---

## QAR Structure (10-Section Template)

Every institutional multifamily QAR follows a conventional 10-section structure (R9). Sophisticated LPs expect these sections in roughly this order; deviations signal either immaturity or an attempt to bury underperformance.

| # | Section | Format | Target Length | Purpose |
|---|---|---|---|---|
| 1 | **Executive Summary / Thesis Status** | Narrative | ½ – 1 page | States the original investment thesis in one sentence, then grades current progress (on-track / ahead / behind / materially off-track). Highlights the 3–5 most important quarter-over-quarter changes. Written last; read first. |
| 2 | **Performance Snapshot** | Tabular | 1 page | Current quarter actuals vs budget vs prior-year actuals for the 6–10 headline KPIs. Scannable. |
| 3 | **KPI Dashboard** | Tabular | 1–2 pages | Same KPIs as snapshot, plus trailing-quarter and TTM views, plus YTD views. Occupancy/rent/NOI broken out by unit type if meaningful. |
| 4 | **Variance Commentary** | Narrative + table | 1–3 pp healthy / 4–6 pp variance-heavy | Line-item explanation of material variances. Classification per `_taxonomy-seed.md` §3 (Timing / Permanent / One-Time). Plain English, not spreadsheet-speak. |
| 5 | **Leasing & Occupancy Performance** | Narrative + tables | 1–2 pages | New-lease change, renewal change, blended lease trade-out, concessions environment, retention rate, turnover rate, days-to-lease, traffic counts. |
| 6 | **Capital Projects Status** | Tabular | ½ – 2 pages | Budget vs actual on any active CapEx or value-add program, by project. Schedule-to-complete commentary. |
| 7 | **Market Update** | Narrative | ½ – 1 page | Submarket supply, competing lease-up, rent trends, local economic indicators relevant to the asset. Short — not a market study. |
| 8 | **Risks & Watch Items** | Narrative bulleted | ½ – 1 page | Known or emerging issues: insurance renewal risk, tax reassessment, concentration exposure, management-turnover risk. |
| 9 | **Financial Position** | Tabular | 1 page | Debt summary (balance, rate, maturity, DSCR, LTV/LTC), cash position, reserves balance, capital-call / distribution activity during the quarter. |
| 10 | **Forward-Look / Next Quarter Plan** | Short narrative | ½ page | Sponsor's view of next quarter: leasing targets, CapEx milestones, decision points, expected distribution activity. |

### Length Norms (R9)

| Asset Status | Target Length | Signal if Shorter | Signal if Longer |
|---|---|---|---|
| Stabilized single asset | 8–12 pages | <6 pp = under-disclosure | >15 pp = possible burying the lede |
| Value-add / in-business-plan | 15–20 pages | <12 pp = under-disclosure on CapEx and ramp detail | >25 pp = over-disclosure, usually in an underperforming quarter |
| Lease-up / development | 15–20 pages | <12 pp = under-disclosure | >25 pp = over-disclosure |

These norms are not prescribed by ILPA or NCREIF but are the observable convention across sophisticated GP templates and align with ILPA Quarterly Reporting Standards' emphasis on "clarity and conciseness."

### Commentary-to-Table Ratio (R9)

The QAR overall should run roughly 50/50 between tables/exhibits and narrative. Section-by-section tilt:

| Section | Table % | Narrative % |
|---|---|---|
| Executive Summary | 10% | 90% |
| Performance Snapshot | 90% | 10% |
| KPI Dashboard | 80% | 20% |
| Variance Commentary | 30% | 70% |
| Leasing & Occupancy | 50% | 50% |
| Capital Projects | 70% | 30% |
| Market Update | 10% | 90% |
| Risks & Watch Items | 5% | 95% |
| Financial Position | 80% | 20% |
| Forward-Look | 0% | 100% |
| **Document overall** | **~50%** | **~50%** |

---

## Mandatory KPI Checklist

The KPIs below are the **mandatory floor** for an institutional multifamily QAR (R9). Every item on this list appears in the quarterly supplementals of the major public multifamily REITs (AVB, EQR, CPT, MAA, ESS, UDR) and is expected by LPs reviewing private GP reports. **Formulas are quoted by reference only.** Do not redefine in the writer skill or variance skill.

### Core Operating KPIs

| KPI | QAR Cadence | Formula Source | Benchmark Source |
|---|---|---|---|
| **Physical Occupancy** | Point-in-time (end of quarter) + quarterly average | `_taxonomy-seed.md` §2 — Physical Occupancy | `multifamily-benchmarks.md` §Physical Occupancy Benchmarks |
| **Economic Occupancy** | Quarterly average | `_taxonomy-seed.md` §2 — Economic Occupancy | `multifamily-benchmarks.md` §Economic Occupancy vs Physical |
| **NOI (quarterly, YTD, TTM)** | Three columns: Q actual vs Q budget vs Q prior-year | `_taxonomy-seed.md` §2 — NOI (AM convention, reserves below line) | `underwriting-calc.md` §NOI |
| **NOI Growth YoY** (same-store) | Quarterly + YTD | % change vs prior-year same period | REIT supplementals standard (AVB, EQR, CPT) |
| **Revenue Growth YoY** (same-store) | Quarterly + YTD | % change in total residential revenue | REIT supplementals standard |
| **Expense Growth YoY** (same-store) | Quarterly + YTD | % change in controllable + total OpEx | REIT supplementals standard |
| **Rent Growth YoY / Blended Lease Trade-Out** | Quarterly | New-lease change %, Renewal change %, Blended change % | `_taxonomy-seed.md` §4 Effective Rent |
| **Retention Rate** | Quarterly | Renewals ÷ lease expirations in period | `multifamily-benchmarks.md` §Lease Renewal Metrics |
| **Turnover Rate** | Quarterly (annualized) and TTM | Units turned ÷ total units, annualized | `multifamily-benchmarks.md` §Turnover rate |
| **Bad Debt %** (of GPR) | Quarterly + TTM | `_taxonomy-seed.md` §2 — Bad Debt / GPI | `multifamily-benchmarks.md` §Bad Debt Ratio |
| **Operating Expense Ratio** | Quarterly + TTM | Total OpEx ÷ EGI | `multifamily-benchmarks.md` §Operating Expense Ratio |
| **Concessions** ($ or % of GPR) | Quarterly | Annualized $ drag on GPR | `_taxonomy-seed.md` §2 — Concessions |

### Financing KPIs (if levered)

| KPI | QAR Cadence | Formula Source | Benchmark Source |
|---|---|---|---|
| **DSCR** | Point-in-time end of quarter + TTM | `underwriting-calc.md` §DSCR | `multifamily-benchmarks.md` §DSCR Calculation |
| **LTV** | Point-in-time | Current debt balance ÷ current appraised value | `multifamily-benchmarks.md` §Typical Loan Parameters |
| **LTC** | Point-in-time | Current debt balance ÷ total cost basis | `multifamily-benchmarks.md` §Typical Loan Parameters |
| **Debt Yield** | Point-in-time + TTM | NOI ÷ loan balance | `underwriting-calc.md` §Debt Yield |

### Supplementary Fund / LP-Level KPIs

Not property-specific, but often consolidated in a multi-asset QAR or reported separately per ILPA Quarterly Reporting Standards (R9):

- **Net IRR, Gross IRR** — since-inception
- **TVPI (Total Value to Paid-In)** — ANREV/INREV/NCREIF global definition
- **DPI (Distributions to Paid-In)** — ILPA standard
- **RVPI (Residual Value to Paid-In)** — ILPA standard
- **NAV** — quarterly mark with valuation methodology stated
- **Uncalled Capital Commitment** — per ILPA quarterly reporting template
- **Fee and Carry accrual** — per ILPA fee transparency standards

**Same-store convention (R9).** A single-asset QAR does not need a "same-store vs non-same-store" breakout. But the writer should flag if the property had a mid-quarter event (major renovation, tax reassessment, insurance recategorization) that creates a comparability break; footnote and optionally exclude from the headline NOI-growth figure with disclosure.

---

## T-3 vs T-12 Bridging Rules

Both T-3 and T-12 appear in institutional QARs but answer different questions (R9). The pack convention is:

> **T-12 always, T-3 when diagnostic, T-1 never.**

| Window | Purpose | When to Show | When to Omit |
|---|---|---|---|
| **T-12 (trailing twelve months)** | Run-rate NOI and valuation anchoring. Shown in every QAR KPI dashboard. | Always — T-12 is what valuation, refinancing, and buyer underwriting will use. Showing it keeps LP expectations calibrated to how the asset will ultimately be valued / sold / refinanced. | Never omitted from the QAR. |
| **T-3 (trailing three months)** | Trend / momentum diagnosis. A T-3 annualized NOI that diverges materially from T-12 signals a directional shift the LP needs to see. | Show as a supplementary "most-recent-trend" overlay **when** T-3 and T-12 meaningfully diverge (roughly >5% difference in annualized NOI), or in any value-add / lease-up situation where T-12 still reflects pre-business-plan performance. | Suppress when T-3 and T-12 are within 5% — avoids table clutter. |
| **T-1 (single month annualized)** | Not a QAR-level metric. | Never at the QAR level. | Properly confined to the monthly flash report. Too volatile for quarterly institutional reporting. |

**Lender T-3 convention (R9).** Mortgage underwriters (Fannie Mae, Freddie Mac, most bridge lenders) routinely apply T-3 as a "haircut" stress on T-12 — if T-3 annualized is materially below T-12, loan sizing uses the lower figure. This is a lender convention, not an LP-reporting convention, but sophisticated LPs track the same ratio because it foreshadows refinance sizing risk. A QAR that discusses upcoming refinance should explicitly reconcile T-3 vs T-12 in the Financial Position section.

---

## Variance Classification at the Reporting Layer

**The reporting-layer question is different from the analytical-layer question** (R9). The analytical layer (R2, Variance Analyst) answers: "what is the classification of this line-item variance?" (Timing / Permanent / One-Time, per `_taxonomy-seed.md §3`). The reporting layer (R9, QAR Writer) answers: "how is that classification packaged for an LP?"

### Tabular Presentation Convention

Institutional GPs present variance tables with a consistent column set, matching both the variance-analyst standard column set (R2) and the REIT supplemental convention (R9):

| Column | Purpose | Source |
|---|---|---|
| Line Item | Canonical chart of accounts (aligned with `_taxonomy-seed.md` §1) | R2 |
| Budget | Approved annual / period budget | R2 |
| Actual | Reported actual | R2 |
| Variance ($) | Actual − Budget (favorable/unfavorable per sign convention) | R2 |
| Variance (%) | Variance $ ÷ Budget; suppressed when denominator near zero | R2 |
| Classification | Timing / Permanent / One-Time per `_taxonomy-seed.md` §3 | R2 + R9 |
| Driver | 3–8 word plain-English cause | R9 |

### Narrative Packaging for LP Consumption

LP-facing narrative commentary (R2 + R9) must include, for every variance exceeding materiality:

1. **The specific GL line** — not a vague category
2. **Quantification in both $ and %** — not one or the other
3. **Operational or market driver** — what caused it
4. **Classification bucket** — Timing / Permanent / One-Time (or the operator's industry equivalent)
5. **Forward-period implication** — what it means for the rest of the year (or explicitly "no forward impact — timing only")

### Model Narrative Format (R2)

Synthesized from 2024 REIT commentary (Camden Property Trust Q2 2024, UDR Q1 2025, AvalonBay FY 2023 10-Q):

> **Pattern: topic → driver → quantification → classification → forward-look.**
> *Example:* "Property taxes for the quarter came in $48,000 favorable to budget (−11%), driven by a successful 2024 assessment appeal at the Atlanta asset that reduced the assessed value by $2.1M. This is a permanent variance — the new assessment basis persists for at least the next reassessment cycle. Full-year expense guidance is tightened by 30 bps."

### Normalized / Run-Rate NOI Footnote (R9)

The QAR should present both the GAAP / cash NOI and a "normalized" NOI that removes One-Time items. Institutional LPs track both. AvalonBay, EQR, and Camden all reconcile to an "adjusted" or "core FFO" measure that strips non-recurring items, with a bridge table. Private-GP QARs should mirror the bridge convention at the NOI level (not FFO — see §Conflicting Source Resolution in R9).

**Storm-cost normalization divergence (R2).** Most multifamily REITs add back named-storm costs to Core FFO. MAA's CFO (Q3 2024 call) explicitly stated MAA does NOT add back — a peer-disagreement on policy. Resolution for the reporting writer: variance classification (One-Time) is independent of the operator's FFO/NOI add-back policy. The variance report must flag the storm cost as One-Time regardless of whether the operator excludes it from the normalized line. Confirm the operator's add-back policy at engagement onboarding.

---

## Materiality Thresholds in Reports

The pack materiality convention (inherited from `_taxonomy-seed.md` §3, corroborated by R2):

> **Default materiality floor: lesser of 10% of budgeted line item OR $25,000 absolute.**

### When Materiality Triggers Narrative vs Table-Only (R2 + R9)

| Variance Magnitude | Narrative Commentary | Variance Table Entry | Forward-Reforecast Update |
|---|---|---|---|
| Below 10% AND below $25k | None (table-only, no driver required) | Optional (report in aggregate or suppress for noise) | No |
| Crosses 10% OR $25k threshold | **Required** — topic, driver, $ and %, classification, forward-look | Required with driver column | Only if classification = Permanent |
| Crosses 25% OR $100k | **Required + escalate** to Executive Summary and/or Risks & Watch Items if adverse | Required with expanded driver | Yes if Permanent; flag even if Timing/One-Time |
| Crosses 50% or affects covenants | **Required + Executive Summary headline** + immediate LP notification separate from QAR | Required with full reconciliation | Yes — ad-hoc reforecast; do not wait for quarter-end |

### Dual-Threshold Operator Overrides (R2)

The default $25k floor is appropriate for a stabilized 200-unit asset with ~$3M OpEx. Scale-sensitivity:

| Property Scale | Recommended Absolute Floor | Recommended % Floor |
|---|---|---|
| 50-unit garden-style | $5,000 | 10% |
| 100–300 units (pack default) | $25,000 | 10% |
| 400+ units / multi-property portfolio | $25,000–$50,000 | 5%–10% (tighten % for large line items like property taxes and payroll where a 5% swing is still meaningful) |
| Portfolio-level consolidated QAR | $50,000+ | 5% |

**Small-line-item warning (R2).** If a property's Marketing budget is set low ($30k/year) and it runs 50% over ($15k variance), the $25k absolute floor would suppress the flag — but this is a material operational issue. Operators running lean chart-of-accounts should use the smaller $5k floor. State the materiality convention at the top of every variance package.

### Commentary Section Length Convention (R9)

- Healthy quarter variance commentary: 1–3 pages
- Variance-heavy quarter: 4–6 pages
- Over 6 pages: push back — likely throat-clearing or burying the lede in an underperforming quarter

Long variance narrative is acceptable **when** there is genuinely more to explain; it is not acceptable as throat-clearing.

---

## Capital Call / Distribution Reporting

Per ILPA Quarterly Reporting Standards (R9), every QAR must include — at the fund or JV level — a capital-account activity section containing:

| Field | Cadence | Source Template |
|---|---|---|
| Capital commitment (total and per LP) | As-of end of quarter | ILPA Reporting Template |
| Uncalled capital (remaining commitment) | As-of end of quarter | ILPA Reporting Template |
| Capital calls in the quarter | Quarter activity | ILPA standardized capital-call notice template |
| Distributions in the quarter | Quarter activity | ILPA standardized distribution notice template |
| Running paid-in capital, DPI, RVPI, TVPI | Since-inception cumulative | ILPA Reporting Template |
| Cumulative IRR (net and gross) | Since-inception | ANREV/INREV/NCREIF global definition |

**Each capital call entry must include:** date, amount, purpose (CapEx call, operating shortfall, acquisition-closing call, follow-on).

**Each distribution entry must include:** date, amount, source (operating distribution, refinance proceeds, disposition proceeds, promote distribution).

**ILPA template usage rule (R9).** The writer should use ILPA's standardized capital-call and distribution notice templates verbatim where possible. LPs consolidate multiple GP notices, and divergent formats create reconciliation burden. ILPA's position: the GP narrative may be custom, the capital-account data must be standardized.

---

## Waterfall Transparency Conventions

Institutional LPs now expect quarterly transparency on the promote waterfall, not just at exit (R9). The sophisticated-GP convention:

| Disclosure | Content | Presentation |
|---|---|---|
| **Pref accrual** | Running balance of accrued (but unpaid) preferred return, separate for each capital tranche if multiple. Both $ and implied % of LP capital. | Table — one row per tranche |
| **Catch-up status** | Whether the GP catch-up tier has been triggered, and if so, how much has been paid. | Narrative + $ figure |
| **Promote status** | Cumulative promote paid to date; whether current quarter's distributions hit the promote tier. | Narrative + $ figure |
| **Clawback exposure** | If fund documents include a clawback, flag any scenario where realized-to-date promote could be subject to clawback on liquidation. | Narrative footnote — only when applicable |
| **Tier-by-tier distribution reconciliation** | When a distribution is made, show which waterfall tier it settled against (return of capital, pref, catch-up, promote). | Table — one row per distribution |

**Tier reconciliation convention (R9).** ILPA's template treats tier reconciliation as best-practice. Not universally required, but the standard sophisticated-LP ask. Omission triggers LP follow-up requests and erodes re-up probability.

---

## ESG / DEI / Resident Retention Reporting

Institutional LPs now require quarterly (or at minimum annual with quarterly narrative updates) reporting on non-financial dimensions that a decade ago were not part of the QAR (R9). **A 2026 QAR that omits ESG and DEI disclosure entirely is out of step with institutional norms** per ILPA Diversity in Action and PRI Real Estate Module.

### ESG / Sustainability Metrics (per GRESB and PRI)

| Metric | Cadence | QAR Presentation |
|---|---|---|
| Energy consumption (kWh total, kWh per unit, YoY change) | Quarterly narrative + YoY trend | Tabular YoY comparison |
| Water consumption (gallons per unit, YoY change) | Quarterly narrative + YoY trend | Tabular YoY comparison |
| GHG emissions (Scope 1, Scope 2) | Quarterly; Scope 3 often annual | Tabular |
| Green building certifications (LEED, ENERGY STAR, NGBS) | Status and progress | Narrative + status flag |
| Climate / catastrophe exposure updates | Quarterly (if changed) | Narrative in Risks & Watch Items |

### DEI / Diversity of Leadership (per ILPA Diversity in Action)

| Metric | Cadence | QAR Presentation |
|---|---|---|
| Property-management team diversity composition (when GP manages directly) | Annual measurement + quarterly narrative | Tabular annual; narrative quarterly |
| Board / executive-leadership diversity at the sponsor level | Annual measurement + quarterly narrative | Tabular annual; narrative quarterly |
| Diverse-vendor procurement spend % | Quarterly | Tabular trailing-12-month rolling |
| Annual DEI survey data | Annual (full); quarterly narrative updates | Tabular annual; narrative quarterly |

### Resident Retention and Experience Policy

| Metric | Cadence | QAR Presentation |
|---|---|---|
| Retention rate + driver narrative | Quarterly | KPI dashboard + narrative in Leasing & Occupancy |
| Resident satisfaction survey (e.g., SatisFacts, Kingsley) | Quarterly where available | Tabular score + narrative |
| Resident-community programming highlights | Quarterly | Narrative in Leasing & Occupancy — typically not a standalone exhibit |

**Cadence resolution (R9).** GRESB's formal assessment is annual. Most institutional LPs now expect quarterly narrative updates on ESG with full metric refresh annual-only. A QAR that attempts to recompute all GRESB metrics quarterly is over-engineered; a QAR that omits ESG entirely is under-disclosed. Pack convention: **quarterly narrative + year-over-year trend commentary; full metric refresh in the Q4 / annual report.**

---

## Edge Cases and Red Flags

Flags that the variance analyst and QAR writer should catch during self-review (synthesized from R2 + R9):

| Edge Case / Red Flag | Reporting Implication |
|---|---|
| Lease-up or value-add asset | Standard 10-section structure applies, but Performance Snapshot must state the asset is not stabilized; Variance Commentary reconciles against business-plan ramp-schedule, not steady-state budget; KPI dashboard adds lease velocity (units/week), exposure, physical occupancy ramp vs pro forma. |
| Mid-quarter acquisition | Prorated occupancy and operating results require a footnote stating the period covered; do not annualize partial-quarter data without disclosure; use "stub period" language. |
| Insurance renewal or tax reassessment mid-quarter | Flag in Risks & Watch Items even when financial impact lands later. LPs should not be surprised by a Q3 forecast revision for an event seen in Q1 and not disclosed. |
| Refinance or disposition in-quarter | Separate "Capital Transactions" section or expand Financial Position. Do not bury refi/disposition inside the regular Financial Position summary. |
| Sponsor-affiliated service provider fees | Must be separately disclosed (management fee, construction management, leasing commissions) per ILPA fee transparency. Burying inside generic OpEx is a specific LP red flag. |
| Going-concern or debt-maturity stress | If within 12 months of loan maturity OR DSCR <1.15x on a covenant-limited loan OR lockbox triggered — surface in both Executive Summary and Financial Position. Omission = material reporting failure. |
| Property-manager change or replacement in-quarter | Flag prominently; include transition cost, continuity plan, data-integrity gaps. |
| One-size-fits-all templating | Boilerplate commentary repeated across assets erodes credibility. Asset-specific narrative required, not template-filled placeholders. |
| Over-length driven by underperformance | Tightening, not expanding, is the correct response. State underperformance cleanly in Executive Summary; work through cause and response in Variance Commentary and Risks. |
| Missing ESG / DEI / resident-retention disclosure | Out of step with 2026 norms. Flag as gap in the output. |
| Line items near zero budget (R2) | Variance % blows up when denominator is small. Suppress the percentage and report only dollar variance. Materiality relies on the $25k absolute floor. |
| Re-classification mid-year (R2) | An item flagged Timing that persists 2+ consecutive months same direction should be re-evaluated as Permanent. Update classification in the current-period report. |
| Mixed Timing + Permanent variances (R2) | Split into components in commentary. Do not force a mixed variance into one bucket. |
| Unbudgeted line items (R2) | Treat the full actual as variance. Classification depends on event: new recurring reserve = Permanent; one-off litigation = One-Time. |
| Cash-vs-accrual basis mismatch (R2) | Property tax and insurance will show large apparent variances every month that are purely basis-difference, not operational. Reconcile at report assembly, not in the variance column. |
| Storm event with insurance recovery lag (R2) | Gross cost hits P&L in month incurred; recovery may land 6–18 months later. Variance commentary must disclose gross loss + expected recovery + deductible. |
| Reforecast re-baselining without budget rebase (R2) | A reforecast is an updated estimate, NOT a new approved budget. Never silently replace the original budget with the reforecast. Carry both as separate columns. |

---

## Cross-References Into Pack Knowledge

This KB is additive and non-conflicting with repo KBs. No existing file is modified. Downstream skills (Variance Analyst, QAR Writer) should:

- Pull **KPI formulas, variance bucket decision rules, and line-item definitions** from `research/asset-management/_taxonomy-seed.md`
- Pull **per-unit expense benchmark ranges, occupancy benchmarks, turnover/retention benchmarks, DSCR / LTV / LTC ranges** from `knowledge/multifamily-benchmarks.md`
- Pull **DSCR, Debt Yield, Cap Rate, IRR, NOI, EGI, and other financing/return formulas** from `knowledge/underwriting-calc.md`
- Use **this KB** for: LP report cadence, QAR section structure, mandatory KPI checklist (which KPIs to include, not how to compute), T-3 vs T-12 bridging rules, materiality thresholds at the reporting layer, commentary-to-table ratios, length norms, waterfall transparency, ESG/DEI/resident-retention reporting conventions

Any apparent conflict between this KB and `_taxonomy-seed.md`, `multifamily-benchmarks.md`, or `underwriting-calc.md` must be resolved **in favor of the authoritative reference file** and flagged back to the pack author for reconciliation.

---

## Research Note Attribution

Every standard in this KB traces to one of the two Phase 0b research notes:

- **R2 — `research/asset-management/monthly-variance-analyst-research.md`** — source for materiality thresholds, variance classification packaging, variance column-set convention, dual-threshold operator overrides, variance commentary narrative format, edge cases on line-item basis and timing
- **R9 — `research/asset-management/quarterly-asset-review-writer-research.md`** — source for QAR 10-section structure, length norms, commentary-to-table ratios, mandatory KPI checklist, T-3 vs T-12 bridging rules, capital-call/distribution reporting per ILPA, waterfall transparency, ESG/DEI/resident-retention conventions, LP report cadence

Inline citations throughout this KB use parenthetical "(R2)" and "(R9)" tags. Authoritative reference files (`_taxonomy-seed.md`, `multifamily-benchmarks.md`, `underwriting-calc.md`) are cross-referenced by backtick path.

---

*Last updated: 2026-04-24. Phase 1 KB author T1.3. Asset Management pack v1.3.0. Standards should be validated against current ILPA, NCREIF-PREA, GRESB, and PRI guidance for each reporting engagement; institutional LP expectations shift materially year over year, especially on ESG/DEI and waterfall transparency.*
