U.S. institutional investors saw their real estate investments return 11.82 percent in 2014, according to the National Council of Real Estate Investment Fiduciaries.
The group also reported that 2014 saw the highest volume of real estate transactions among institutional investors since 2005.
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The council’s NCREIF Property Index showed that real estate owned by institutions had returns of 11.82% in 2014. That’s up slightly from 2013, when returns were 11.22%, but down from 2011 when returns were 14.26%.
The index tracks the performance of over 7,000 properties valued at over $400 billion that are owned by pension funds, asset managers and other institutional investors. The return is a combination of income and the appreciation of the properties. All the returns are unleveraged, assuming the properties are purchased on an all-cash basis.
For 2014, the 11.82% return consisted of a 5.36% income return and a 6.21% appreciation return, NCREIF said.
NCREIF reported that net income at the properties that it tracks increased 6.5% for the year. Occupancy ended the year at 9.9%, the highest level since the first quarter of 2008.
NCREIF also said that sales volume was increasing. In the fourth quarter of 2014, the institutions that the council tracks sold 282 properties and added 271 buildings. That’s the highest transaction volume since 2005.
The 2014 return of 11.82 percent is considered a “sustainable level”, Jeffrey Fisher, a NCREIF researcher, told the Wall Street Journal.
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