Core real estate funds post a 6.63% total return for the quarter, the highest since inception of the NFI-ODCE index
CHICAGO, IL, October 29, 2021 – The National Council of Real Estate Investment Fiduciaries (NCREIF) released third quarter 2021 results for the NCREIF Fund Index – Open‐end Diversified Core Equity (NFI-ODCE). The NFI-ODCE consists of 27 funds totaling $293.8 billion of gross real estate assets and $246.8 billion of net real estate assets.
NFI-ODCE total return gross of fees for the third quarter 2021 was 6.63%, up from 3.93% in the previous quarter, and from 0.48% a year ago in third quarter 2020. The income return was 1.01%, up slightly from 0.99% in the previous quarter, and from 0.95% in third quarter 2020. The appreciation return was 5.61% for the quarter, above the previous quarter’s 2.94%, and up significantly from 2020 third quarter’s -0.46%.
Quarterly NFI-ODCE Gross Return Trends
For the one-year ended September 30, 2021, the NFI-ODCE total return gross of fees was 14.63%, up from 8.02% for the one-year ended June 30, 2021, and well above the three-year annualized return of 7.06%. The one-year total return ended September 30, 2021 was comprised of 3.96% income and a 10.35% 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 above the 21.8% average since 2000, registering 22.1% as of current quarter-end, down slightly from 22.6% in the previous quarter.
NFI-ODCE Leverage Trends (% of total assets)
Quarterly investor net cash flows (investor contributions less distributions and redemptions) were negative $800.3 million, compared to last quarter’s negative $1.3 billion, and third quarter 2020’s negative $817.3 million. For the one-year ended September 30, 2021, contributions were $17.4 billion, and distributions and redemptions were $22.4 billion, resulting in an annual investor net cash flow of negative $5.0 billion.
NFI-ODCE Investor Cash Flow Trends (4Q Rolling Total, Billions)
Additional details from the NFI-ODCE release are in the attached Snapshot Report.