NFI-ODCE’s 2019q3 total return is up compared to last quarter as appreciation bounces back from negative territory
CHICAGO, IL, October 30, 2019 – The National Council of Real Estate Investment Fiduciaries (NCREIF) released third quarter 2019 results for the NCREIF Fund Index – Open‐end Diversified Core Equity (NFI-ODCE). The NFI-ODCE consists of 24 funds, totaling $260.1 billion of gross real estate assets and $218.8 billion of net real estate assets.
NFI-ODCE total return gross of fees for the third quarter 2019 was 1.31%, up from 1.00% in the second quarter 2019, and down from 2.09% a year ago in the third quarter 2018. The income return for the quarter was 1.05%, up 0.04% from the previous quarter, but well below the ten and twenty-year quarterly averages of 1.24% and 1.46%, respectively. Appreciation increased to 0.26% for the quarter, above the previous quarter’s -0.01%, and down 0.79% from the third quarter 2018.
Quarterly NFI-ODCE Gross Return Trends
For the one-year ended September 30, 2019, the NFI-ODCE total return gross of fees was 5.59%, down from 8.68% for the one-year ended September 30, 2018 and well below the annualized since inception return of 7.58%. The annual total return was comprised of 4.15% income and 1.39% 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 21.7% as of the end of third 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 $909.2 million, compared to last quarter’s negative $73.7 million, and third quarter 2018’s positive $1.0 billion. For the one-year ended September 30, 2019, contributions were $17.3 billion and distributions/redemptions were $20.1 billion, resulting in an annual investor net cash flow of negative $2.8 billion.
NFI-ODCE Investor Cash Flow Trends (4Q Rolling Total, Billions)
Additional details from the NFI-ODCE release are in the attached Snapshot Report.