Real Estate

Timothy Peterson

Real estate is a unique asset class in that it often has characteristics of debt, public equity and private equity. Accordingly, it has adopted the performance measurement practices of each of these other asset classes. For example, TWR is typically used for open-end funds, and IRR and investment multiples are reported for closed-end funds.

This chapter covers four topics: the NCREIF PREA Reporting Standards (“Reporting Standards” or “RS”), performance reporting practices, equity multiples, and indexes. The first is an overview of the Reporting Standards. The second covers performance calculations, which are based on RS guidance. Specific calculations can be found in the Performance Measurement Resource Manual, which is part of the RS Handbook. This manual provides detailed calculation instructions on property level, investment level and fund level time-weighted returns, IRRs, equity multiples and other metrics, and also includes a list of performance disclosures. Accordingly, we will not repeat that information here. Rather, we provide an overview of the Reporting Standards, as well as performance measurement practices, at a very basic level. The last section, on indexes