Flattening out: Institutional real estate performance moderation continues in 2016
The downward trend in quarterly NCREIF Property Index total returns continued in first quarter 2016. With $490.8 billion of market value, the quarterly NPI total return was 2.21 percent, consisting of a 1.17 percent income return and 1.04 percent appreciation. This was below both the 2.91 percent fourth quarter 2015 return and 3.09 percent return for third quarter 2015.
The annual NPI total return through first quarter 2016 was 11.84 percent and consisted of a 4.94 percent income return and 6.66 percent appreciation. Appreciation strengthened over 2015 to its highest annual return since 2007 but then edged down in first quarter 2016. Meanwhile, the annual income return has been trending down slowly over the past five years and, at 4.94 percent, is the lowest in the series.
Among the 7,323 qualifying NPI properties, 52 percent utilize leverage, with a combined loan-to-value ratio of 41.8 percent. Leveraged NPI total returns were 2.93 percent for first quarter 2016 and 1