NFI-ODCE Final Released
Core Real Estate Funds' Return turn negative, the largest decline since the Great Recession
CHICAGO, IL, January 30, 2023 – The National Council of Real Estate Investment Fiduciaries (NCREIF) released fourth quarter 2022 results for the NCREIF Fund Index – Open‐end Diversified Core Equity (NFI-ODCE). The NFI-ODCE consists of 26 funds totaling $341.4 billion of gross real estate assets and $284.6 billion of net real estate assets.
NFI-ODCE total return gross of fees for the fourth quarter 2022 was -4.97%, down from 0.52% in the previous quarter, and from 7.97% a year ago in fourth quarter 2021. The income return was 0.80%, just below 0.81% in the previous quarter, and down from 0.97% in fourth quarter 2021. The appreciation return was -5.76% for the quarter, well below the previous quarter's -0.28%, and from 2021 fourth quarter's 6.99%. The since inception average quarterly income and appreciation returns are 1.67% and 0.47%, respectively.
Quarterly NFI-ODCE Gross Total Return Trends
For the one-year ended December 31, 2022, the NFI-ODCE total return gross of fees was 7.47% comprised of 3.44% income and a 3.92% appreciation return.
NFI-ODCE returns measure fund-level performance and therefore can reflect leverage and other investments beyond properties, including cash balances. Leverage is conservative among these funds given their core strategies, ranging from 15% to 34% over the quarterly series history beginning in 2000. NFI-ODCE leverage is above the 21.8% average since 2000, registering 22.7% as of current quarter-end, up from 21.5% the previous quarter.
NFI-ODCE Leverage Trends (% of total assets)
Quarterly investor net cash flows (investor contributions less distributions and redemptions) were negative $1.1 billion compared to last quarter's positive $777 million, and fourth quarter 2021's positive $470 million. For the one-year ended December 31, 2022, contributions were $22.1 billion, and distributions and redemptions were $22.4 billion, resulting in an annual investor net cash flow of negative $291 million.
NFI-ODCE Investor Cash Flow Trends (4Q Rolling Total, Billions)
Additional details from the NFI-ODCE release are in the attached Snapshot Report.