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NCREIF: Returns Improve but Stay Negative Due to Office
The National Council of Real Estate Investment Fiduciaries (NCREIF) said second-quarter results for its
NCREIF Property Index (NPI) showed a decline in aggregate market value for the eighth consecutive quarter and returns were negative for the seventh straight quarter. All property sectors were able to produce positive returns in Q2 with the exception of office properties, which dragged overall returns into
negative territory.
The market value index has declined by about 16.5% since peaking in Q2 2022. However, NCREIF noted that this is still significantly less of a drop than occurred during the financial crisis in 2008 and 2009, when values declined by almost 30%. The total return for the quarter was -0.22%. While still negative, the return has improved for the past two quarters after dropping to -2.95% in Q4 2023.
NCREIF said the negative 0.22% total quarterly return consisted of 1.18% from income and -1.40% from negative property appreciation. As of quarter-end there were 4,611 leveraged properties–out of a total NPI universe of 12,789 properties–with a leveraged return of -1.69% and a weighted average loan to value ratio of 50%, the highest LTV since 2012. The higher LTV is mainly due to declining property values.
- ◦Sale/Acquisition
