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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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Loreen M. Gilbert, CIMA, AIF, CRC, CLTC – President, WealthWise Financial Services
Blue Vault
July 6, 2016

Our firm has been using Blue Vault from the first year it was available.

We have found it to be a valuable tool to verify what wholesalers tell us and to dig deep into how the reported investments are really performing.

We appreciate that Blue Vault has expanded its services from initially covering REIT's to now also including BDC's.

Our clients also appreciate that we conduct this additional due diligence on their behalf.