Total return for 2019q1 trends lower and investor net cash flows remain negative.
CHICAGO, IL, April 30, 2019 – The National Council of Real Estate Investment Fiduciaries (NCREIF) released first quarter 2019 results for the NCREIF Fund Index – Open‐end Diversified Core Equity (NFI-ODCE). The NFI-ODCE consists of 25 funds, totaling $256.5 billion of gross real estate assets and $214.6 billion of net real estate assets.
NFI-ODCE total return gross of fees for the first quarter 2019 was 1.42%, down from 1.76% in the fourth quarter 2018, and from 2.20% a year ago in the first quarter 2018. The income return for the quarter was 1.02%, down 0.01% from the previous quarter, and well below the ten and twenty-year quarterly averages of 1.26% and 1.48%, respectively. Appreciation decreased to 0.40% for the quarter, below the previous quarter’s 0.74%, and down 0.76% from the first quarter 2018. This quarter, appreciation fell below the 0.89% and 0.62% ten and twenty-year quarterly averages, respectively. On a total return basis, the 1.42% for the first quarter 2019 is also well below the ten-year and twenty-year averages of 2.16% and 2.11%, respectively.
Quarterly NFI-ODCE Gross Return Trends
For the one-year ended March 31, 2019, the NFI-ODCE total return gross of fees was 7.52%, down from 8.35% for the year ended 2018 and below the annualized since inception return of 8.69%. The annual total return was comprised of a 4.19% income and 3.23% appreciation.
NFI-ODCE returns measure fund-level performance and therefore can reflect leverage and other investments beyond properties, including cash balances. Leverage is conservative among these funds given their core strategies, ranging from 15%-to-34% over the quarterly series history beginning in 2000. NFI-ODCE leverage remains below the 21.8% average since 2000 and was 21.6% as of the end of first quarter 2019, up slightly from 21.5% in the previous quarter.
NFI-ODCE Leverage Trends (% of total assets)
Quarterly NFI-ODCE investor net cash flows were negative $904.6 million, slightly less than last quarter’s negative $917.6 million, and much worse than first quarter 2018’s positive $74.0 million. For the one-year ended March 31, 2019, contributions were $18.78 billion and distributions/redemptions were $18.84 billion, resulting in an annual negative net cash flow of $60.0 million.
NFI-ODCE Investor Cash Flow Trends (4Q Rolling Total, Billions)
Additional details from the NFI-ODCE release are in the attached Snapshot Report.