The NCREIF Property Index, or NPI, started 2015 with a 3.57 percent quarterly return. This is the highest quarterly return since second quarter 2011. This strong performance was led by retail properties, which returned just below 5 percent for the quarter. We have to interpret this return with a little grain of salt, however, because some large retail properties were revalued this quarter that have annual (rather than quarterly) valuations. That said, the four-quarter return for retail properties is a strong 13.81 percent, which is second only to industrial properties, which had a four-quarter return of 14.22 percent.

When combined with the use of financial leverage, the return for the quarter is magnified to 5.8 percent. In contrast, the S&P 500 Index had a return of 1.0 percent for the quarter, and Barclays Government Bond Index had a return of 1.6 percent. REITs in the NAREIT Equity REIT Index had a return of 4.0 percent. Thus, private, leveraged real estate was the be