 |
 |
 |
 |
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
|
 |
 |
 |
|
   |
|
 |
|
|
 |
|
Benchmark Comparisons
There are three industry benchmarks used to measure Fund-level performance and property-level performance: the NCREIF Property Index; the NCREIF Open-End Index; and the NCREIF Fund Index - Open End Diversified Core Equity (NFI-ODCE). Out of the three, the NFI-ODCE currently offers the most appropriate benchmark for evaluating MEPT's total performance. The most widely used real estate benchmark, the NCREIF Property Index (NPI), is composed of approximately 6,290 institutional grade, operating properties valued at over $305 billion. The NPI is designed to measure the performance and return characteristics of a set of core properties on an unleveraged basis. The properties are pooled from different types of funds and single-investor portfolios, all with varying investment strategies. The return data for the NPI can be analyzed by sector and region, as well as subsectors and sub-regions. The return data is also available on a historic basis and can be used for complex analysis. Since the NPI is derived from property level performance, it does not measure the effect of cash, leverage or management fees on returns, nor does it take into consideration differences in property valuation frequency in the Index. When benchmarked against MEPT's property level returns (operating real estate only), the NPI does provide an apples to apples, or real estate to real estate, comparison of performance.NCREIF has developed a sub-index, the NCREIF Open-End Index (OPI), comprised of only those properties in the NPI owned by open-end funds. MEPT believes that the sub-index offers an even more applicable benchmark than the NPI to measure the performance of MEPT's real estate, since it allows for the comparison of properties that are more frequently valued than those in the NPI as open-end funds have more stringent valuation requirements than privately held and single investor portfolios. The most relevant comparison would be the performance of MEPT's operating real estate portfolio to the performance of the OPI. NewTower, MEPT's Trustee, relies on this benchmark to conduct quarterly attribution analyses. In 2005, NCREIF released an open-end Fund level index, the NCREIF Fund Index - Open End Diversified Core Equity (NFI-ODCE). Different from the NPI, the NFI-ODCE is comprised of only open-end funds, and excludes all the closed-end and separate account real estate portfolios. The NFI-ODCE index reports on both a historical and current basis the results of 26 open-end, commingled funds pursuing a core investment strategy. Currently, the benchmark includes funds with total market value of $93 billion. The index includes property investments at ownership share, cash balances and leverage, allowing it to reflect the fund's actual asset ownership positions and financing strategy. The NFI-ODCE is best suited as a benchmark from MEPT since it specifically covers core funds and the effects of their cash balances and leverage on fund performance. Since open-end funds in the NFI-ODCE have different strategies, the funds may perform well at different times in the real estate/economic cycle. Therefore, it makes sense to look at long-term comparisons of the NFI-ODCE because the performance of the varying fund strategies can be tested throughout all stages of the real estate cycle. MEPT's long-term returns have consistently outpaced the benchmarks. A dollar invested in MEPT in 1982 at the Fund's inception has significantly outgrown that same investment in the NCREIF Property Index and the NFI-ODCE. For more information, please visit www.ncreif.org |
Back to Home Sitemap |
 |
© 2003, Multi-Employer Property Trust. All Rights Reserved