Defined Benefit
Insurance Assets

Strong Quarter for Real Estate, Both Public and Private

Strong Quarter for Real Estate, Both Public and Private
1 min 10 sec

Best gain for ODCE in a decade

  • The recovery gained steam as the NCREIF ODCE Index posted its strongest quarterly return in 10 years; Industrial remains the best performer.
  • Income stayed positive except in the Hotel sector.
  • Niche sectors such as self-storage and life sciences continued to be accretive.
  • Vacancy rates kept compressing in Industrial and Multifamily as demand stayed strong.
  • Net operating income stayed negative for Office and Retail but a recovery continued.
  • Tenants were poised to return to work but the Delta variant may change that.
  • Pent-up demand is evident through foot traffic in retail centers.
  • 2Q21 rent collections showed relatively stable income throughout the quarter in the Industrial, Apartment, and Office sectors; the Retail sector remained challenged, with regional malls impacted most heavily.
  • Class A/B urban apartments were relatively strong, followed by Industrial and Office.
  • Demand outpaced supply as new construction of preleased Industrial and Multifamily occurred.
Sector Quarterly Returns by Property Type and Region, 2Q21

Global REITs outpace broader equity market recovery

  • Global REITs outperformed in 2Q21, gaining 9.2% compared to 7.7% for global equities (MSCI World).
  • U.S. REITs rose 12.0% in 2Q21, beating the S&P 500 Index, which gained 8.5%.
  • Globally, REITs are trading above NAV with the exception of those in Hong Kong, the United Kingdom, and Continental Europe.
  • Ongoing volatility in REIT share prices offers opportunities to purchase mispriced securities, individual assets from REIT owners, and discounted debt.
  • It also gives investors the potential to lend to companies and/or execute take-privates of public companies.

Posted by

Share on facebook
Share on twitter
Share on linkedin
Related Posts
Defined Benefit

Tough Environment Leads to Losses for Hedge Fund Managers

Joe McGuane
Joe McGuane analyzes hedge fund and MAC performance in 2Q22.
Defined Benefit

Private Equity Shows Persistence Amid Volatile Markets

Gary Robertson
Gary Robertson provides an analysis of private equity activity in 2Q22, from fundraising to exits to returns.
Defined Benefit

Private Credit Interest Still High Despite Illiquidity Premium Close to Zero

Catherine Beard
Catherine Beard analyzes the performance of private credit in 2Q22 and explains what is happening with its illiquidity premium.
Defined Benefit

Recession—Are We There Yet?

Jay Kloepfer
Jay Kloepfer analyzes the U.S. and global economies in 2Q22 and explains why we are not technically in a recession.
Defined Benefit

The Fading Unicorn: How Volatility, Inflation, and Rate Hikes Impact Venture Capital

Ashley Kahn
Ashley Kahn explains the impact of rising inflation, interest rate hikes, and market volatility on venture capital portfolios.
Defined Benefit

Bubbles Bursting Everywhere

Janet Becker-Wold
Janet Becker-Wold explains how recent bubbles inflated and what their popping means for institutional investors.
Defined Benefit

Few Bright Spots as Markets Continue to Drop

Kristin Bradbury
Kristin Bradbury recaps how the global markets performed in 2Q22.
Defined Benefit

Global Challenges Mount

Kristin Bradbury
Kristin Bradbury analyzes the global economy in 2Q22.
Defined Benefit

Do Active Core Plus Fixed Income Managers Add Value With Sector Rotation?

Kevin Machiz
Kevin Machiz examines the added value of active core plus fixed income managers vs. a DIY portfolio.
Defined Benefit

Alignment of Interests: Best Practices to Make Sure Investors and Their Managers Are in Sync

Jan Mende
Jan Mende discusses how institutional investors can make sure their interests are aligned with their private markets investment managers.

Callan Family Office

You are now leaving Callan LLC’s website and going to Callan Family Office’s website. Callan Family Office is not affiliated with Callan LLC.  Callan LLC has licensed the Callan® trademark to Callan Family Office for use in providing investment advisory services to ultra-high net worth clients, family foundations, and endowments. Callan Family Office and Callan LLC are independent, unaffiliated investment advisory firms separately registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940.

Callan LLC is not responsible for the services and content on Callan Family Office’s website. Inclusion of this link does not constitute or imply an endorsement, sponsorship, or recommendation by Callan LLC of their website, or its contents, and Callan LLC is not responsible or liable for your use of it. When visiting their website, you are subject to Callan Family Office’s terms of use and privacy policies.