INREV will introduce a new internal rate of return (IRR) index that its says will help align the real estate investment industry more closely with other asset classes such as private equity.
An initial consultation version of the index will be launched next month and future editions of the index will be released quarterly, approximately three weeks after the INREV Quarterly Index.
The association says the index will measure performance based on cash-on-cash returns as opposed to the value-to-value approach in the Modified Dietz method, which is the current default measurement for most real estate indices. It will be particularly relevant for closed-end funds. The index benefits from earlier work to capture data from every single vehicle in the INREV database. This means the IRR Index could include performance data from a robust sample of 191 funds across vintages from pre-2002 to 2017.
The IRR Index is the latest addition to INREV’s existing series of regular indices, which includes the INREV Annual Index, the INREV Quarterly Index, the German Vehicles Index, the Global Investor Index and the Global Real Estate Funds Index.
Henri Vuong, INREV’s director of research and market information, said: “The launch of this index marks another important step forward on the journey to total transparency for the non-listed real estate industry. It will complement other similar indices that already exist in the U.S. and Asia, which could all potentially be combined to create a global index in the future.”
