NFI-ODCE posts a positive total return, a welcomed reversal from last quarter.
CHICAGO, IL, October 30, 2020 – The National Council of Real Estate Investment Fiduciaries (NCREIF) released third quarter 2020 results for the NCREIF Fund Index – Open‐end Diversified Core Equity (NFI-ODCE). The NFI-ODCE consists of 25 funds, totaling $267.1 billion of gross real estate assets and $223.6 billion of net real estate assets.
NFI-ODCE total return gross of fees for the third quarter 2020 was 0.48%, up from -1.56% in the previous quarter, and down from 1.31% a year ago in third quarter 2019. The income return was 0.95%, up from 0.91% in the previous quarter, and down from 1.05% in third quarter 2019. The appreciation return was -0.46% for the quarter, above the previous quarter’s -2.46%, and down from 2019 third quarter’s 0.26%.
Quarterly NFI-ODCE Gross Return Trends
For the one-year ended September 30, 2020, the NFI-ODCE total return gross of fees was 1.39%, down from 5.59% for the one-year ended September 30, 2019 and well below the five-year annualized return of 6.64%. The one-year total return ended September 30, 2020 was comprised of 3.97% income and a -2.50% appreciation return.
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 above the 21.8% average since 2000, registering 22.7% as of the end of the quarter, up from 22.3% in the previous quarter. Because the property values are marked-to-market every quarter, the increase in leverage is due in part to the decline in property values.
NFI-ODCE Leverage Trends (% of total assets)
Quarterly NFI-ODCE investor net cash flows were negative $817.3 million, compared to last quarter’s negative $799.7 million, and third quarter 2019’s negative $909.2 million. For the one-year ended September 30, 2020, contributions were $13.8 billion, and distributions and redemptions were $15.6 billion, resulting in an annual investor net cash flow of negative $1.8 billion.
NFI-ODCE Investor Cash Flow Trends (4Q Rolling Total, Billions)
Additional details from the NFI-ODCE release are in the attached Snapshot Report.