Nearly thirty years after the creation of the NCREIF Property Index, the question remains whether it is an appropriate reference point for quantifying the performance of U.S. core portfolios. More recently, the National Council of Real Estate Investment Fiduciaries (NCREIF) began publishing a fund index, which is exclusively comprised of core strategy open-end private real estate funds.
This Russell Viewpoint highlights key elements in identifying an appropriate benchmark for U.S. core private real estate portfolios by discussing the following:
- unleveraged returns well suited as indicators of sector and market performance
- the leverage rule distorts NCREIF Property Index returns
- joint venture structures are increasingly common
- the valuation process impacts responsiveness to market changes
- investment style
In addition, this paper discusses important considerations in evaluating alternative measurement approaches.
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