New US Property Fund Index from PREA and IPD

The Pension Real Estate Association (PREA) and Investment Property Databank (IPD) announced this month that they would co-sponsor a US Property Fund Index to measure real estate investment performance for open-end, commingled funds. According to an IPE article, the new benchmark will track the performance of open-ended US real estate funds against the underlying direct property market, highlighting any value added by active management. The PREA/IPD US Property Fund Index will become a component of the IPD Global Property Fund Index, enabling IPD clients and PREA members to evaluate their performance in a global context. The tentative target date for having the PREA/IPD US Property Fund Index up and running is mid-August, 2012.

Ted Eliopoulos, Senior Investment Officer for the California Public Employees' Retirement System (CalPERS) and Chairman of the PREA Board of Directors said that "PREA is looking forward to our co-sponsorship with IPD on the PREA/IPD US Property Fund Index. Not only will the US Property Fund Index increase transparency for the asset class in general, but our new relationship will provide significant benefits for PREA members."

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EU Commercial Market Showing Signs of Recovery

A new article from the Wall Street Journal titled "Heavy Weather: The European property market is finally emerging from its recessionary deep-freeze, but there are still plenty of icy patches for investors to slip on" takes stock of the current commercial market conditions in Europe. The article notes that prices in the U.K. fell 44.2% between July 2007 and July 2009, according to Investment Property Databank. And according to CB Richard Ellis Group, investment volumes in Europe as a whole fell from the record high of €256 billion ($350 billion) in 2007 to €73 billion in 2009.

"Two years ago we were looking down the edge of a cliff," said Robert Noel, managing director of the London portfolio at Land Securities. "We are now buying into a recovery and there is not enough office supply to meet the demand."

"The market had been picking up, partly thanks to banks lending again," said Eric Sasson, who heads up the European operations at The Carlyle Group, the private equity firm. "But the Greece crisis put a hold to that. Having just got out of the freezing zone, banks went cold again – and some deals got delayed."

"There was a massive globalized real estate market in 2007," says Pierre Vaquier, chief executive of AXA Real Estate Investment Managers. "But then afterwards there was a 'flight to home' – as people wanted to go where they understand best."

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