The National Council of Real Estate Investment Fiduciaries (NCREIF) is the trade association that basically consists of tax-exempt real estate typically held by pension funds. NCREIF generates several total property returns indices. This highly transparent dataset included 7,353 properties with an estimated market value of $505.3 billion as of the end of Q2 2016. These are up from $471.7 billion across 7,225 properties as of the end of 2015, a gain of 7.12 percent and 1.74 percent, respectively. NCREIF reports the data for five separate property types plus an All Properties return including:
Hotels
Apartments
Industrial
Office
Retail
Returns are calculated quarterly and include both the net-cash flow from the property and the change in the property value. Specifically, total return is the net operating income from the property, less property management fees, plus the change in value. The annual returns referenced in this blog are the simple sum of the prior four quarters.
The previous five blogs looked at each of the individual property types. This one looks at all of these combined.
The following table contains the latest Quarterly Return Indices for the commercial properties held in tax exempt investments.
The next table shows the trailing 12 months (four quarters) returns. The calculation is simply the addition of the four quarters without consideration of compounding.
These excellent returns are not always recurring, as shown in the following graph detailing the return for the trailing 12-months quarterly. As they always say, past performance does not guaranty future returns. While the latest TTM return of 10.24 percent is greater than 8.88 percent average since 2001, it has declined three consecutive quarters, as shown in the following graph.
The next graph shows the five individual property type return series. Note that each of the five series are showing a downward trend in recent quarters.
To view or download the data click http://www.ncreif.org/property-index-returns.aspx?region=N NCREIF also breaks these returns down to four regions across the country: South – Midwest – East – West
Ted