Third Quarter 2017 NCREIF Indices Review Fall Conference November 7, 2017
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Third Quarter 2017NCREIF Indices Review
Fall Conference
November 7, 2017
Panelist Overview
Jeff FisherNCREIF Data & Research Consultant
Sara RutledgeNCREIF Director of Research
John EhliPortfolio Manager
Deutsche Asset Management
Disclaimer
Today we will be presenting what we see in the NCREIF data, trends and changes; all comments about future expectations are the personal views of the speakers and not a reflection of a NCREIF opinion or forecast.
Overview
Steady as She Goes
• 3Q 2017 NPI total return nearly equal to same quarter last
year
• Volatility of total returns at historic low
• Industrial remains the top performer
• Net NFI-ODCE fund flows remain negative for the trailing year
• Occupancy holding at its 15-year high
• Rental income growth mixed by property type as retail
struggles and industrial remains strong
4
NCREIF OverviewThird Quarter 2017 Index Composition
5
NPINPI - Leveraged Properties Only
NFI-ODCE Farmland Timberland
Contributors 64 63 23 7 11
Properties 7,165 3,568 2,510 699 476
Market Value $543.5 B $349.8 B $220.9 B $8.1 B $26.2 B
Inception Date 1978 Q4 1983 Q1 1978 Q4 1990 Q4 1987 Q1
Sold Properties 193 108 41 2 12
Leverage Unlevered 41.5% 21.3% Unlevered Unlevered
Quarterly Return 1.70% 2.01% 1.87% 1.02% 0.60%
1 Year Return 6.89% 8.96% 7.66% 6.15% 3.28%
Note: NFI-ODCE returns are gross of fees.
Total Return Trends by Asset Class
6
Comparison as of September 30, 2017
1.7% 2.0%1.0%
0.6%
1.9%1.1%
4.5%
6.9%
9.0%
6.2%
3.3%
7.7%
2.6%
18.6%
6.2%
7.6%
12.6%
5.2% 5.0%
6.1%
7.4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
NPI Leveraged NPI NCREIF Farmland NCREIFTimberland
NFI-ODCE - grossof fees
NAREIT EquityREIT Index
S&P 500 Index
3Q 2017 1-Year 10-Year
7
Note: The Market Value Index (MVI) is an equal-weighted index and excludes expansion capital expenditures.
50
100
150
200
250
300
350
1978
119
791
1980
119
811
1982
119
831
1984
119
851
1986
119
871
1988
119
891
1990
119
911
1992
119
931
1994
119
951
1996
119
971
1998
119
991
2000
120
011
2002
120
031
2004
120
051
2006
120
071
2008
120
091
2010
120
111
2012
120
131
2014
120
151
2016
120
171
Mar
ket
Val
ue
Ind
ex
NPI Total Return Stable at 1.5%-to-1.75% for Past 5 Quarters…
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3
NP
I To
tal R
etu
rn
…with Prices Still Rising and Well Above Long-Term Trend and Prior Peak
NPI ‘VIX’: 4Q Standard Deviation of Total Returns
8
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%1
98
73
19
88
3
19
89
3
19
90
3
19
91
3
19
92
3
19
93
3
19
94
3
19
95
3
19
96
3
19
97
3
19
98
3
19
99
3
20
00
3
20
01
3
20
02
3
20
03
3
20
04
3
20
05
3
20
06
3
20
07
3
20
08
3
20
09
3
20
10
3
20
11
3
20
12
3
20
13
3
20
14
3
20
15
3
20
16
3
20
17
3
Annual NPI Return History
9
-30%
-20%
-10%
0%
10%
20%
30%
19
79
Q1
19
80
Q1
19
81
Q1
19
82
Q1
19
83
Q1
19
84
Q1
19
85
Q1
19
86
Q1
19
87
Q1
19
88
Q1
19
89
Q1
19
90
Q1
19
91
Q1
19
92
Q1
19
93
Q1
19
94
Q1
19
95
Q1
19
96
Q1
19
97
Q1
19
98
Q1
19
99
Q1
20
00
Q1
20
01
Q1
20
02
Q1
20
03
Q1
20
04
Q1
20
05
Q1
20
06
Q1
20
07
Q1
20
08
Q1
20
09
Q1
20
10
Q1
20
11
Q1
20
12
Q1
20
13
Q1
20
14
Q1
20
15
Q1
20
16
Q1
20
17
Q1
Total Return Income Return Capital Return
Property Leverage Ratio for All NPI and ODCE with Implied Interest Rate
0%
2%
4%
6%
8%
10%
12%
14%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
19
831
19
841
19
851
19
861
19
871
19
881
19
891
19
901
19
911
19
921
19
931
19
941
199
51
19
961
19
971
19
981
19
991
20
001
20
011
20
021
20
031
20
041
20
051
20
061
20
071
20
081
20
091
20
101
20
111
20
121
201
31
20
141
20
151
20
161
20
171
Imp
lied
Inte
rest
Rat
e
Loan
-to
-Val
ue
Rat
io
Property LTV - All NPI Property LTV - ODCE Implied Interest Rate
10
Question
• What will be the best performing asset class in 2017?
– A. NCREIF Leveraged Returns
– B. S&P 500 Stocks
– C. Corporate Bonds
– D. NAREIT Index
11
Annual Real GDP Growth and NPI Total Return
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
19
913
19
921
19
923
19
931
199
33
19
941
19
943
19
951
19
953
19
961
19
963
19
971
19
973
19
981
19
983
19
991
19
993
20
001
20
003
20
011
20
013
200
21
20
023
20
031
20
033
20
041
20
043
20
051
20
053
20
061
20
063
20
071
20
073
20
081
20
083
20
091
20
093
20
101
201
03
20
111
20
113
20
121
20
123
201
31
20
133
20
141
20
143
20
151
20
153
20
161
20
163
20
171
20
173
NP
I To
tal R
etu
rn
Rea
l GD
P G
row
th
Annual GDP Growth Annual NPI Total Return
12
Source: U.S. Bureau of Labor Statistics, NCREIF.
Quarterly Real GDP Growth: Contributions by Major Component
13
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017
Qu
arte
rly
Gro
wth
, SA
AR
Personal Consumption Business Investment Residential Investment Inventories
Exports Imports Government GDP Growth
Source: U.S. Bureau of Economic Analysis, NCREIF.
Annual Office Employment Growth and NPI Total Returns
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
19
913
19
921
19
923
19
931
199
33
19
941
19
943
19
951
19
953
19
961
19
963
19
971
19
973
19
981
19
983
19
991
19
993
20
001
20
003
20
011
20
013
200
21
20
023
20
031
20
033
20
041
20
043
20
051
20
053
20
061
20
063
20
071
20
073
20
081
20
083
20
091
20
093
20
101
201
03
20
111
20
113
20
121
20
123
201
31
20
133
20
141
20
143
20
151
20
153
20
161
20
163
20
171
20
173
NP
I To
tal R
etu
rn
Off
ice
Em
plo
ymen
t G
row
th
Annual Office Job Growth Annual NPI Total Return
14
Source: U.S. Bureau of Labor Statistics, NCREIF.
Annual Job Growth: Key Real Estate Segments
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
19
913
19
921
19
923
19
931
199
33
19
941
19
943
19
951
19
953
19
961
19
963
19
971
19
973
19
981
19
983
19
991
19
993
20
001
20
003
20
011
20
013
200
21
20
023
20
031
20
033
20
041
20
043
20
051
20
053
20
061
20
063
20
071
20
073
20
081
20
083
20
091
20
093
20
101
201
03
20
111
20
113
20
121
20
123
201
31
20
133
20
141
20
143
20
151
20
153
20
161
20
163
20
171
20
173
An
nu
al J
ob
Gro
wth
Office Transp/Warehousing Retail
15
Source: U.S. Bureau of Labor Statistics, NCREIF.
NFI-ODCE Fund Flows4Q Rolling Total as of September 30, 2017
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.01
Q 2
00
1
3Q
20
01
1Q
20
02
3Q
20
02
1Q
20
03
3Q
20
03
1Q
20
04
3Q
20
04
1Q
20
05
3Q
20
05
1Q
20
06
3Q
20
06
1Q
20
07
3Q
20
07
1Q
20
08
3Q
20
08
1Q
20
09
3Q
20
09
1Q
20
10
3Q
20
10
1Q
20
11
3Q
20
11
1Q
20
12
3Q
20
12
1Q
20
13
3Q
20
13
1Q
20
14
3Q
20
14
1Q
20
15
3Q
20
15
1Q
20
16
3Q
20
16
1Q
20
17
3Q
20
17
OD
CE
Net
Fu
nd
Flo
ws
($B
il)
Contributions Distributions/Redemptions
16
NFI-ODCE Fund Flows as Share of Net Real Estate Assets 4Q Rolling Total as of September 30, 2017
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%1
Q 2
00
1
3Q
20
01
1Q
20
02
3Q
20
02
1Q
20
03
3Q
20
03
1Q
20
04
3Q
20
04
1Q
20
05
3Q
20
05
1Q
20
06
3Q
20
06
1Q
20
07
3Q
20
07
1Q
20
08
3Q
20
08
1Q
20
09
3Q
20
09
1Q
20
10
3Q
20
10
1Q
20
11
3Q
20
11
1Q
20
12
3Q
20
12
1Q
20
13
3Q
20
13
1Q
20
14
3Q
20
14
1Q
20
15
3Q
20
15
1Q
20
16
3Q
20
16
1Q
20
17
3Q
20
17
NFI
-OD
CE
Fun
d F
low
s (%
Net
RE
Ass
ets)
Net Flows Contributions Distributions/Redemptions
17
NFI-ODCE Net Fund Flows as Share of Net Real Estate Assets with Total Returns4Q Rolling Fund Flows Share/Annual Returns as of September 30, 2017
-40.0%
-35.0%
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%1
Q 2
00
1
3Q
20
01
1Q
20
02
3Q
20
02
1Q
20
03
3Q
20
03
1Q
20
04
3Q
20
04
1Q
20
05
3Q
20
05
1Q
20
06
3Q
20
06
1Q
20
07
3Q
20
07
1Q
20
08
3Q
20
08
1Q
20
09
3Q
20
09
1Q
20
10
3Q
20
10
1Q
20
11
3Q
20
11
1Q
20
12
3Q
20
12
1Q
20
13
3Q
20
13
1Q
20
14
3Q
20
14
1Q
20
15
3Q
20
15
1Q
20
16
3Q
20
16
1Q
20
17
3Q
20
17
An
nu
al T
ota
l Ret
urn
NFI
-OD
CE
Net
Fu
nd
Flo
ws
(% N
et R
E A
sset
s)
Net Flows NFI-ODCE Annual Total Return NPI Annual Total Return
18
19
NPI Sale Transactions
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
0
100
200
300
400
500
600
700
800
900
1,000
19
90
Q4
19
91
Q4
19
92
Q4
19
93
Q4
19
94
Q4
19
95
Q4
19
96
Q4
19
97
Q4
19
98
Q4
19
99
Q4
20
00
Q4
200
1Q
4
20
02
Q4
20
03
Q4
20
04
Q4
20
05
Q4
20
06
Q4
20
07
Q4
20
08
Q4
20
09
Q4
20
10
Q4
20
11
Q4
20
12
Q4
20
13
Q4
20
14
Q4
20
15
Q4
20
16
Q4
Sale
s V
olu
me
($B
il)
Sold
Pro
per
tie
s
4Q Rolling Sold Properties 4Q Rolling Sales Volume
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
1990
Q4
199
1Q
4
1992
Q4
1993
Q4
1994
Q4
1995
Q4
1996
Q4
199
7Q
4
1998
Q4
1999
Q4
2000
Q4
2001
Q4
2002
Q4
200
3Q
4
2004
Q4
2005
Q4
2006
Q4
2007
Q4
2008
Q4
2009
Q4
2010
Q4
2011
Q4
2012
Q4
2013
Q4
2014
Q4
2015
Q4
2016
Q4
Per
cen
t So
ld
Cap
ital
Ret
urn
Capital Return Percent Sold
Annual NPI Sales Transactions and Volume
Annual Capital Return and Share of NPI Properties Sold
Long-Term NPI Implied Appraisal Capitalization Rate Trend
20
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%1
97
84
19
79
4
19
80
4
19
81
4
19
82
4
19
83
4
19
84
4
19
85
4
19
86
4
19
87
4
19
88
4
19
89
4
19
90
4
19
91
4
19
92
4
19
93
4
19
94
4
19
95
4
19
96
4
19
97
4
19
98
4
19
99
4
20
00
4
20
01
4
20
02
4
20
03
4
20
04
4
20
05
4
20
06
4
20
07
4
20
08
4
20
09
4
20
10
4
20
11
4
20
12
4
20
13
4
20
14
4
20
15
4
20
16
4
4Q
MA
Val
ue
Wei
ghte
d C
ap R
ate
Cap Rate 20Y Avg SI Avg
Note: Implied Cap Rate Equals Current Quarter NOI Divided by Current Quarter Market Value Multiplied by 4.
NPI Cap Rate Spreads: 10Y U.S. Treasury and Corporate BBB Effective Yield
21
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
19
97
Q1
19
97
Q3
19
98
Q1
19
98
Q3
19
99
Q1
19
99
Q3
20
00
Q1
20
00
Q3
20
01
Q1
20
01
Q3
20
02
Q1
20
02
Q3
20
03
Q1
20
03
Q3
20
04
Q1
20
04
Q3
20
05
Q1
20
05
Q3
20
06
Q1
20
06
Q3
20
07
Q1
20
07
Q3
20
08
Q1
20
08
Q3
20
09
Q1
20
09
Q3
20
10
Q1
20
10
Q3
20
11
Q1
20
11
Q3
20
12
Q1
20
12
Q3
20
13
Q1
20
13
Q3
20
14
Q1
20
14
Q3
20
15
Q1
20
15
Q3
20
16
Q1
20
16
Q3
20
17
Q1
20
17
Q3
NP
I Cap
Rat
e Sp
read
Spread to Corp BBB 20Y Avg - BBB Spread to 10Y UST 20Y Avg - UST
Source: Federal Reserve Bank of St. Louis (FRED), NCREIF.
Question
• What will cap rates be for the nation by the end of 2017?
– A. Below 4%
– B. 4% to 5%
– C. 5% to 6%
– D. Above 6%
22
NPI Capitalization Rates: Trend by Property Type
4%
5%
6%
7%
8%
9%
10%
19
97
31
99
81
19
98
31
99
91
19
99
32
00
01
20
00
32
00
11
20
01
32
00
21
20
02
32
00
31
20
03
32
00
41
20
04
32
00
51
20
05
32
00
61
20
06
32
00
71
20
07
32
00
81
20
08
32
00
91
20
09
32
01
01
20
10
32
01
11
20
11
32
01
21
20
12
32
01
31
20
13
32
01
41
20
14
32
01
51
20
15
32
01
61
20
16
32
01
71
20
17
3
4Q
MA
Cap
Rat
e
Apartment Industrial Office Retail
23
NFI-ODCE Fund Discount Rates: Trend by Property Type10-Year Holding Period
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
20
11
-Q1
20
11
-Q2
20
11
-Q3
20
11
-Q4
20
12
-Q1
20
12
-Q2
20
12
-Q3
20
12
-Q4
20
13
-Q1
20
13
-Q2
20
13
-Q3
20
13
-Q4
20
14
-Q1
20
14
-Q2
20
14
-Q3
20
14
-Q4
20
15
-Q1
20
15
-Q2
20
15
-Q3
20
15
-Q4
20
16
-Q1
20
16
-Q2
20
16
-Q3
20
16
-Q4
20
17
-Q1
20
17
-Q2
20
17
-Q3
Dis
cou
nt
Rat
e
Apartment Industrial Office Retail
24
Note: Data excludes two NFI-ODCE funds. Source: Altus, NCREIF.
25
Note: The Market Value Index (MVI) is an equal-weighted index and excludes expansion capital expenditures.
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
50
100
150
200
250
300
350
19
79
1
19
80
1
19
81
1
19
82
1
19
83
1
19
84
1
19
85
1
19
86
1
19
87
1
19
88
1
19
89
1
19
90
1
19
91
1
19
92
1
19
93
1
19
94
1
19
95
1
19
96
1
19
97
1
19
98
1
19
99
1
20
00
1
20
01
1
20
02
1
20
03
1
20
04
1
20
05
1
20
06
1
20
07
1
20
08
1
20
09
1
20
10
1
20
11
1
20
12
1
20
13
1
20
14
1
20
15
1
20
16
1
20
17
1
Level Annual Change
NCREIF Indicators: Market Value Index (MVI) MVI
60
70
80
90
100
110
120
130
140
2Q
20
08
3Q
20
08
4Q
20
08
1Q
20
09
2Q
20
09
3Q
20
09
4Q
20
09
1Q
20
10
2Q
20
10
3Q
20
10
4Q
20
10
1Q
20
11
2Q
20
11
3Q
20
11
4Q
20
11
1Q
20
12
2Q
20
12
3Q
20
12
4Q
20
12
1Q
20
13
2Q
20
13
3Q
20
13
4Q
20
13
1Q
20
14
2Q
20
14
3Q
20
14
4Q
20
14
1Q
20
15
2Q
20
15
3Q
20
15
4Q
20
15
1Q
20
16
2Q
20
16
3Q
20
16
4Q
20
16
1Q
20
17
2Q
20
17
3Q
20
17
Apartment Industrial Office Retail
MVI by Property Type
Question
• When will the Market Value Index (MVI) peak for this cycle?
– A. 2017
– B. 2018
– C. 2019
– D. 2020 or later
26
NPI Total Returns: Current Quarter Detail
Property Size Total Returns Fund Type Total Returns
Appraisal Type Total Returns Ownership Returns
27
1.50%
2.03%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
> $100 million <= $100 million
1.58%1.87%
1.62%
2.50%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
ODCE Open End SeparateAccount
Closed
1.66% 1.74%
0.0%
0.5%
1.0%
1.5%
2.0%
External Internal
1.62% 1.76%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
Joint Venture Wholly Owned
Top 10 Markets versus All Others
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Seat
tle
Los
An
gele
s
NP
I
Den
ver
San
Fra
nci
sco
Ch
icag
o
Bo
sto
n
New
Yo
rk C
ity
Dal
las
Ho
ust
on
Was
hin
gto
n D
C
Quarterly Total Return: Top 10 and NPI
Top 10 Markets MV ($Bil)
New York City $ 65.92
Los Angeles $ 41.88 Washington DC $ 41.09 Chicago $ 31.63
San Francisco $ 26.01
Seattle $ 22.77 Boston $ 21.87
Dallas $ 21.73 Houston $ 20.56 Denver $ 14.53
1.62%1.80%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
Top 10 Markets Other Markets
NPI Total Returns: Top 10 Markets by Market Value
28
Current Quarter Basis Point Total Return Impact by Metro
Apartment Industrial
Office Retail
29
1.96
-1.58-0.87 -0.84 -0.80
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
Seattle Chicago Houston New York Silver SpringMD
6.58
2.15 2.01 1.99 1.63
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Los Angeles Seattle New York InlandEmpire
Tacoma
-5.26-4.48
1.39
-1.23 -0.89
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
WashingtonDC
New York Seattle Boston OrangeCounty
-1.26
-0.92-0.67 -0.59 -0.59
-1.4
-1.2
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
New York WashingtonDC
Baltimore Knoxville TN San Diego
NPI Total Returns by Property Type: 3Q 2017
30
1.1%
2.2%
1.2%1.1% 1.1%
0.6%
0.1%
2.1%
0.3%
0.1%
1.7%
2.3%
3.3%
1.4%
1.2%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Apartment Hotel Industrial Office Retail
Income Capital Total
NPI Total Returns: Current Quarter Property Type Detail
Apartment by Subtype Industrial by Size/Type
Office by Location/Value Retail by Type
31
1.27%1.67%
2.41%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
High-rise Low-Rise Garden
3.45% 3.45% 3.23%
2.48%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Local Wh. (<=250K SF)
Regional Wh.(250K-500K SF)
National/BulkWh. (500K+ SF)
Other Industrial
1.29%
1.74%
1.19%
0.0%
0.5%
1.0%
1.5%
2.0%
CBD Suburban > $100M Suburban <= $100M
1.22%1.41%
0.96%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
Super Reg./Reg. Neighborhood/Comm. Other Retail
NPI Total Returns by Property Type: Annual Returns Over Last Five Years
32
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Apartment Hotel Industrial Office Retail
3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q 2017
NCREIF Analytics: Market Performance Report5-Yr. Risk v. Return
San Francisco
Chicago
Washington DC
New York
Los AngelesSeattle
Boston
Question
• What will be the best performing property sector in 2017?
– A. Apartment
– B. Hotel
– C. Industrial
– D. Office
– E. Retail
34
NPI Net Operating Income Growth
Rolling Four Quarters
35
4.1%
5.9% 5.7% 5.4%5.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q 2017
NPI Net Operating Income Growth Trends by Property Type
-10%
-5%
0%
5%
10%
15%2
00
73
20
08
1
20
08
3
20
09
1
20
09
3
20
10
1
20
10
3
20
11
1
20
11
3
20
12
1
20
12
3
20
13
1
20
13
3
20
14
1
20
14
3
20
15
1
20
15
3
20
16
1
20
16
3
20
17
1
20
17
3
4Q
Ro
llin
g N
OI G
row
th
Apartment Industrial Office Retail
36
NPI Rental Income Growth
Rolling Four Quarters
37
4.9%
3.9%4.2% 4.1%
3.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q 2017
NPI Rental Income Growth Trends by Property Type
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%2
00
73
20
08
1
20
08
3
20
09
1
20
09
3
20
10
1
20
10
3
20
11
1
20
11
3
20
12
1
20
12
3
20
13
1
20
13
3
20
14
1
20
14
3
20
15
1
20
15
3
20
16
1
20
16
3
20
17
1
20
17
3
4Q
Ro
llin
g R
ent
Gro
wth
Apartment Industrial Office Retail
38
NFI-ODCE Average Projected Market Rent Growth by Property Type10-Year Holding Period
2.0%
2.2%
2.4%
2.6%
2.8%
3.0%
3.2%
3.4%
3.6%
3.8%
20
11
-Q1
20
11
-Q2
20
11
-Q3
20
11
-Q4
20
12
-Q1
20
12
-Q2
20
12
-Q3
20
12
-Q4
20
13
-Q1
20
13
-Q2
20
13
-Q3
20
13
-Q4
20
14
-Q1
20
14
-Q2
20
14
-Q3
20
14
-Q4
20
15
-Q1
20
15
-Q2
20
15
-Q3
20
15
-Q4
20
16
-Q1
20
16
-Q2
20
16
-Q3
20
16
-Q4
20
17
-Q1
20
17
-Q2
20
17
-Q3
Ren
t G
row
th
Apartment Industrial Office Retail
39
Note: Data excludes two NFI-ODCE funds. Source: Altus, NCREIF.
Question
• Which property type will have the highest NOI growth in 2017?
– A. Apartment
– B. Industrial
– C. Office
– D. Retail
40
Occupancy Last Five Years
41
93.2% 93.2% 92.9%93.3% 93.3%
92.9%92.6% 92.7%
92.2% 92.3%
85%
86%
87%
88%
89%
90%
91%
92%
93%
94%
95%
3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017
Occupancy Last Five Quarters
Recent Occupancy Rate Trends
90.7%91.8%
92.9% 93.2%93.3%
91.2%
92.7%93.3%
92.6% 92.3%
80%
85%
90%
95%
100%
3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q 2017
NPI ODCE
Long-Term Occupancy Rate Trends
85.0%
86.0%
87.0%
88.0%
89.0%
90.0%
91.0%
92.0%
93.0%
94.0%
95.0%1
Q 2
00
0
3Q
20
00
1Q
20
01
3Q
20
01
1Q
20
02
3Q
20
02
1Q
20
03
3Q
20
03
1Q
20
04
3Q
20
04
1Q
20
05
3Q
20
05
1Q
20
06
3Q
20
06
1Q
20
07
3Q
20
07
1Q
20
08
3Q
20
08
1Q
20
09
3Q
20
09
1Q
20
10
3Q
20
10
1Q
20
11
3Q
20
11
1Q
20
12
3Q
20
12
1Q
20
13
3Q
20
13
1Q
20
14
3Q
20
14
1Q
20
15
3Q
20
15
1Q
20
16
3Q
20
16
1Q
20
17
3Q
20
17
Occ
up
ancy
Rat
e
NPI NFI-ODCE
42
Occupancy Rate Trends by Property Type
Apartment Industrial
Office Retail
43
90%
91%
92%
93%
94%
95%
96%
97%
20
07
3
20
08
1
20
08
3
20
09
1
20
09
3
20
10
1
20
10
3
20
11
1
20
11
3
20
12
1
20
12
3
20
13
1
20
13
3
20
14
1
20
14
3
20
15
1
20
15
3
20
16
1
20
16
3
20
17
1
20
17
3
NPI ODCE
86%
88%
90%
92%
94%
96%
20
07
3
20
08
1
20
08
3
20
09
1
20
09
3
20
10
1
20
10
3
20
11
1
20
11
3
20
12
1
20
12
3
20
13
1
20
13
3
20
14
1
20
14
3
20
15
1
20
15
3
20
16
1
20
16
3
20
17
1
20
17
3
NPI ODCE
84%
86%
88%
90%
92%
94%
96%
98%
20
07
3
20
08
1
20
08
3
20
09
1
20
09
3
20
10
1
20
10
3
20
11
1
20
11
3
20
12
1
20
12
3
20
13
1
20
13
3
20
14
1
20
14
3
20
15
1
20
15
3
20
16
1
20
16
3
20
17
1
20
17
3
NPI ODCE
82%
84%
86%
88%
90%
92%
94%
20
07
2
20
07
4
20
08
2
20
08
4
20
09
2
20
09
4
20
10
2
20
10
4
20
11
2
20
11
4
20
12
2
20
12
4
20
13
2
20
13
4
20
14
2
20
14
4
20
15
2
20
15
4
20
16
2
20
16
4
20
17
2
NPI ODCE
NCREIF Indictors: Cap Ex Ratio (CXR) and Free Cash Flow Yield (FCFY)
44
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
19
78
41
97
94
19
80
41
98
14
19
82
41
98
34
19
84
41
98
54
19
86
41
98
74
19
88
41
98
94
19
90
41
99
14
19
92
41
99
34
19
94
41
99
54
19
96
41
99
74
19
98
41
99
94
20
00
42
00
14
20
02
42
00
34
20
04
42
00
54
20
06
42
00
74
20
08
42
00
94
20
10
42
01
14
20
12
42
01
34
20
14
42
01
54
20
16
4
CXR (4Q roll) 20Y Avg
2%
3%
4%
5%
6%
7%
8%
9%
19
78
4
19
79
4
19
80
4
19
81
4
19
82
4
19
83
4
19
84
4
19
85
4
19
86
4
19
87
4
19
88
4
19
89
4
19
90
4
19
91
4
19
92
4
19
93
4
19
94
4
19
95
4
19
96
4
19
97
4
19
98
4
19
99
4
20
00
4
20
01
4
20
02
4
20
03
4
20
04
4
20
05
4
20
06
4
20
07
4
20
08
4
20
09
4
20
10
4
20
11
4
20
12
4
20
13
4
20
14
4
20
15
4
20
16
4
FCFY (4Q Roll) 20Y Avg SI Avg
Cap Ex Ratio, Rolling Four Quarters
Free Cash Flow Yield, Rolling Four Quarters
NCREIF Indicators: Total Capital Expenditures as Share of NOI by Property Type
5%
15%
25%
35%
45%
55%
65%
3Q
20
07
4Q
20
07
1Q
20
08
2Q
20
08
3Q
20
08
4Q
20
08
1Q
20
09
2Q
20
09
3Q
20
09
4Q
20
09
1Q
20
10
2Q
20
10
3Q
20
10
4Q
20
10
1Q
20
11
2Q
20
11
3Q
20
11
4Q
20
11
1Q
20
12
2Q
20
12
3Q
20
12
4Q
20
12
1Q
20
13
2Q
20
13
3Q
20
13
4Q
20
13
1Q
20
14
2Q
20
14
3Q
20
14
4Q
20
14
1Q
20
15
2Q
20
15
3Q
20
15
4Q
20
15
1Q
20
16
2Q
20
16
3Q
20
16
4Q
20
16
1Q
20
17
2Q
20
17
3Q
20
17
4Q
MA
Cap
Exas
% o
f N
OI
Apartment Industrial Office Retail
45
NCREIF Indicators: Capital Expenditure Detail as Share of NOI by Property Type
Apartment Industrial
Office Retail
46
0%
5%
10%
15%
20%
25%
30%
35%
40%
3Q
20
07
1Q
20
08
3Q
20
08
1Q
20
09
3Q
20
09
1Q
20
10
3Q
20
10
1Q
20
11
3Q
20
11
1Q
20
12
3Q
20
12
1Q
20
13
3Q
20
13
1Q
20
14
3Q
20
14
1Q
20
15
3Q
20
15
1Q
20
16
3Q
20
16
1Q
20
17
3Q
20
17
Leasing Com. TI's Bldg Imp.
2%
4%
6%
8%
10%
12%
14%
3Q
20
07
1Q
20
08
3Q
20
08
1Q
20
09
3Q
20
09
1Q
20
10
3Q
20
10
1Q
20
11
3Q
20
11
1Q
20
12
3Q
20
12
1Q
20
13
3Q
20
13
1Q
20
14
3Q
20
14
1Q
20
15
3Q
20
15
1Q
20
16
3Q
20
16
1Q
20
17
3Q
20
17
Leasing Com. TI's Bldg Imp.
0%
5%
10%
15%
20%
25%
30%
35%
3Q
20
07
1Q
20
08
3Q
20
08
1Q
20
09
3Q
20
09
1Q
20
10
3Q
20
10
1Q
20
11
3Q
20
11
1Q
20
12
3Q
20
12
1Q
20
13
3Q
20
13
1Q
20
14
3Q
20
14
1Q
20
15
3Q
20
15
1Q
20
16
3Q
20
16
1Q
20
17
3Q
20
17
Leasing Com. TI's Bldg Imp.
0%
5%
10%
15%
20%
3Q
20
07
1Q
20
08
3Q
20
08
1Q
20
09
3Q
20
09
1Q
20
10
3Q
20
10
1Q
20
11
3Q
20
11
1Q
20
12
3Q
20
12
1Q
20
13
3Q
20
13
1Q
20
14
3Q
20
14
1Q
20
15
3Q
20
15
1Q
20
16
3Q
20
16
1Q
20
17
3Q
20
17
Leasing Com. TI's Bldg Imp.
Question
• What will the annual NPI total return be for 2017?
– A. Below 5%
– B. 5%-to-7%
– C. 7%-to-9%
– D. Above 9%
47
Summary
• Macroeconomic trends suggest support for
steady, below average real estate returns
• Cap rate spreads near long-term averages should
insulate values from rising interest rates
• Rental income and NOI growth are above average
overall, although retail has slowed considerably
• Overall occupancy remains elevated and was
steady year-over-year across property types
48
Upcoming NCREIF Events
NCREIF Winter Conference 2018Scottsdale, AZScottsdale Resort at McCormick RanchMarch 13–16
NCREIF Summer Conference 2018Charlotte, NCJune 19–22
NCREIF Fall Conference 2018Lake Buena Vista, FLWalt Disney World SwanNovember 6–9
Visit www.ncreif.org for more information
49
Related Documents
