Jeremy Zirin, CAIA
Senior Research Analyst, Real Assets
Core real estate investments have flourished since the financial crisis. Since delivering six consecutive double-digit annual returns through 2015, the NCREIF Open-end Diversified Core Equity Index (NFI-ODCE) returned a positive 8.8% in 2016 and a positive 3.5% YTD through June 2017. While overall returns are moderating, the relatively lower high single-digit returns remain consistent with our longer term expectations for the asset class and real estate remains an attractive investment relative to other assets classes. Investors may be wondering how much longer the real estate cycle can continue and if it is time to pull back on their allocations. In this newsletter, we address these questions by examining critical drivers of the real estate market, including performance, valuation, leverage, income, and capital flows.
Through October, bank loans are up only 3.7% compared to high yield’s 7.5% return, and the disparity between the two…
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