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Income Plays Bigger Role in Real Estate Returns

August 2, 2016

 

 


Income Plays Bigger Role in Real Estate Returns

July 27, 2016 | By Paul Bubny | GlobeSt.com

CHICAGO—The moderating trend in total returns continued in the second quarter on a steady income return and slowing appreciation, NCREIF said Tuesday.

Continuing a trend seen over the past four quarters, total returns on commercial property investments, as measured by the National Council of Real Estate Investment Fiduciaries, moderated further in the second quarter on a steady income return and slowing appreciation. The NCREIF Property Index showed a total return of 2.03% in Q2, down from 2.21% in Q1, 2.93% in Q4 of 2015, 3.09% for Q3 of last year and 3.14% in the year-ago period.

Q2’s total return consisted a 1.19% income return and 0.84% appreciation. Although the quarterly income return was marginally higher—two basis points—than in Q1, it has been trending down since 2010 with property values rising faster than income, according to NCREIF. With appreciation slowing, the income return has accounted for a larger share of NPI total returns thus far this year.

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Gil Armour, CFP
February 3, 2016

I have been using Blue Vault Partners for the past five years.  I have found them to be a valuable, unbiased resource when it comes to evaluating and comparing non-traded REITs.  The reports help me analyze which sponsors are doing a responsible job of managing their offerings.  This allows me to limit my REIT recommendations to only the most competitive products, and then track those REITs throughout their life cycle.