Office at a 6.4% cap rate? Industrial sub 4%? Multifamily at 4.3%? Fund investors aren't buying it, which helps to explain persistent core capital exit queues.
Core fund redemption queues are still at 13%, on average, which is problematic since these vehicles have the cheapest cost of capital. If they’re out of the market, expect higher return requirements and lower values.
Of the 25 core funds in the NCREIF ODCE index, 2 funds don't have a redemption queue at all, and 11 have less than 10% queued. However, 8 of the funds have 20%+ exit queues and represent more than half of all the queued capital.
Why are queues so persistent? Perhaps because, on balance, their carrying values continue to lag the overall market.
ODCE appraisal cap rates:
Industrial 3.8%
Multifamily 4.3%
Office 6.4%
Retail 5.5%
PS - this is from our favorite regular report, which was just released by StepStone. So many nuggets. Stay tuned.
Core fund redemption queues are still at 13%, on average, which is problematic since these vehicles have the cheapest cost of capital. If they’re out of the market, expect higher return requirements and lower values.
Of the 25 core funds in the NCREIF ODCE index, 2 funds don't have a redemption queue at all, and 11 have less than 10% queued. However, 8 of the funds have 20%+ exit queues and represent more than half of all the queued capital.
Why are queues so persistent? Perhaps because, on balance, their carrying values continue to lag the overall market.
ODCE appraisal cap rates:
Industrial 3.8%
Multifamily 4.3%
Office 6.4%
Retail 5.5%
PS - this is from our favorite regular report, which was just released by StepStone. So many nuggets. Stay tuned.
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