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Institutional Real Estate Components of Quarterly Return

December 11, 2023 / Chart of the Month

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As shown in the chart above, institutional private equity real estate (as measured by the NCREIF Property Index) has experienced a unique dislocation since 2022, where net operating income growth (dark blue column) has remained resilient in an environment where total return (green line) has decreased as a result of a substantial increase in cap rates. We believe this dislocation provides a powerful buying opportunity in private real estate. As cap rates begin to find equilibrium, the contributions of NOI growth to total return should be meaningful.

Source: National Council of Real Estate Investment Fiduciaries, NCREIF Property Index (NPI).

Notes: Income and Total Returns are quarterly. Quarterly NOI growth is Trailing 12 months, divided by four, changes in cap rates reflect the value changes impact of the valuation cap rate moving average.

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. Bluerock is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. All investing is subject to risk, including the possible loss of principal. The information contained herein is sourced from third parties and Bluerock makes no assurances with respect to its accuracy, completeness or timeliness. Past Performance is not necessarily indicative of future results.