Institutional real estate returns to positive territory
The return for institutional investors as measured by the NCREIF Property Index (NPI) turned positive during third quarter 2020. The NPI reflects investment performance for 9,191 commercial properties, totaling $703 billion of market value. The total return was 0.74 percent for the quarter, up from –0.99 percent in the prior quarter. The return for the current quarter was also just slightly higher than the 0.72 percent return in the first quarter. This is an unleveraged return for what is primarily “core” real estate held by institutional investors throughout the U.S. Although leverage was negative for the quarter, the leveraged properties also managed to have a slightly positive return of 0.12 percent.
The total return turned positive for the quarter because the 1.02 percent income portion of the return exceeded the capital portion of the return, which was –0.28 percent. The capital return is the change in value net of any capital expenditures incurred during the qua