Cost to purchase a property in 1981? $7 for every dollar of NOI
That same dollar of NOI in in 2022? Worth $18
$1 of NOI in 1981 = $7 of value
$1 of NOI in 2022 = $18 of value
Nominal growth = 157%
Annualized growth: 2.3%
That's a 2-3% tailwind EVERY YEAR just for being in the game.
No inflationary growth or value creation.
With 6-7% income yields (average NCREIF income returns), that's 8-10% consistent annual returns for the safest perceived properties.
...all due to in-place income and structural capital tailwinds.
All you had to do was to be in the game for a decent period of time during those 41 years.
But those structural tailwinds are gone.
So how should we think about track records touted by managers to their investors?
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