Rentals

Avenue to determine daily apartment values emerges

Newly established series computes daily values of REIT-owned assets

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During May, the overall value of apartments owned by real estate investment trusts (REITs) in the Midwest and West increased, according to the PureProperty Index Series, a recently launched valuation tool created by the National Association of Real Estate Investment Trusts (NAREIT) and FTSE.

In the Midwest, unlevered price returns increased by 0.34 percent, while total returns rose by 0.56 percent. In the West, total returns improved by 0.12 percent, while price returns decreased by 0.08 percent. The East and South witnessed 0.42 percent and 0.38 percent declines in price returns, respectively.

The newly established series computes daily values of REIT-owned assets based on stock prices, property holdings of REITs and balance sheet info. The projected values are intended to enable individuals and firms to better detect risky regions or undervalued markets when eyeing future investments or exits.

“This gives them (institutional investors) a better way to manage their investments,” said Brad Case, senior vice president of research and industry for NAREIT, adding the indices represent an alternative to hiring an appraiser. “Twelve percent of all appraisals are wrong.”

While other property-level indices are computed monthly or quarterly and published with four- to eight-week delays, the FTSE NAREIT PureProperty indices are published on the same day as the returns they measure.

Multifamily return data is available on a U.S. aggregate, regional and property sector basis via the indices. The apartment data takes into account the more than 525,000 units managed by the eight largest rental-focused REITs – Equity Residential, MAA, AvalonBay Communities, Essex Property Trust, UDR, AIMCO, Home Properties and Camden Property Trust.

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Access to daily indices is free, but an institutional investor must subscribe if he wants to use the guide for future capital deployments, similar to the S&P 500, Case said.

Email Erik Pisor.