Real estate investments’ fourth-quarter return of 3.04% was the highest quarterly return in 2014, the National Council of Real Estate Investment Fiduciaries’ NCREIF Property index shows.
The quarterly return was up 51 basis points from 2.53% in the fourth quarter of 2013. The NPI return for the full year of 2014 was 11.82%, up from 10.98% in 2013.
Appreciation contributed more than income to the full-year 2014 return with a 5.36% income and a 6.21% appreciation return. It was the reverse in 2013 when the split was 5.61% income and 5.16% appreciation.
The NPI is unlevered. Leverage offered higher returns last year due to low interest rates, an NPI news release said. The return in the fourth quarter was 4.75% and for the year was 18.67% for NCREIF members’ leveraged properties. Leveraged returns were not provided for 2013.
Industrial properties had the highest total return for the year at 13.42%, followed by retail, 13.12%. Apartments had the lowest return at 10.29%.
By comparison, retail was the top-performing sector in 2013 with a 12.87% total return; industrial was the second-highest sector at 12.33% for the year ended Dec. 31, 2013.