Although the quarterly NPI total return remains modest, returns for second quarter 2018 were the highest for the NPI since second quarter 2016. The total return was 1.81 percent in the second quarter, up slightly from 1.70 percent in the first quarter. This is an unleveraged return for what is primarily “core” real estate held by institutional investors throughout the United States.

The average quarterly return over the past five years was 2.38 percent, or 9.85 percent annualized. Although the current quarter’s return of 1.81 percent, or 7.44 percent annualized, is down from the torrid pace of the previous five years, the downward drop in returns that we witnessed for several years stopped at the beginning of 2017, and returns have held remarkably steady since then.

The second quarter 2018 total return consisted of a 1.14 percent income return and 0.67 percent capital appreciation. The positive capital return indicates properties in the NPI are, on average, still