CHICAGO, IL, July 29, 2022 – The National Council of Real Estate Investment Fiduciaries (NCREIF) released second quarter 2022 results for the NCREIF Fund Index – Open‐end Diversified Core Equity (NFI-ODCE). The NFI-ODCE consists of 26 funds totaling $352.7 billion of gross real estate assets and $296.9 billion of net real estate assets.
NFI-ODCE total return gross of fees for the second quarter 2022 was 4.77%, down from 7.37% in the previous quarter, and up from 3.93% a year ago in second quarter 2021. The since inception average quarterly total return is 2.20%. The income return was 0.87%, down from 0.93% in the previous quarter, and from 0.99% in second quarter 2021. The appreciation return was 3.90% for the quarter, below the previous quarter’s 6.44%, and up from 2021 second quarter’s 2.94%.
Quarterly NFI-ODCE Gross Return Trends
For the one-year ended June 30, 2022, the NFI-ODCE total return gross of fees was 29.51% (the highest since inception), up from 28.47% for the one-year ended March 31, 2022, and well above the three-year annualized return of 12.66%. The one-year total return ended June 30, 2022, was comprised of 3.83% income (the second lowest since inception) and a 24.95% appreciation return (the highest since inception).
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 is slightly below the 21.8% average since 2000, registering 21.5% as of current quarter-end, up slightly from the previous quarter’s 21.0%.
NFI-ODCE Leverage Trends (% of total assets)
Quarterly investor net cash flows (investor contributions less distributions and redemptions) were negative $873.9 million, compared to last quarter’s positive $878.6 million, and second quarter 2021’s negative $1.3 billion. For the one-year ended June 30, 2022, contributions were $25.7 billion, and distributions and redemptions were $26.0 billion, resulting in an annual investor net cash flow of negative $325.6 million.
NFI-ODCE Investor Cash Flow Trends (4Q Rolling Total, Billions)