The FTSE Nareit PureProperty® Index Series provides a daily measure of real estate investment performance (price returns and total returns) of unlevered property investments as well as equity investments in real estate. The values are calculated from daily stock market valuations of, and dividends paid by, stock exchange-listed U.S. equity REITs, using a patented methodology to infer property returns based on detailed information about the holdings and balance sheets of property-owning REITs. U.S. REITs own and manage high-quality properties in and around major metropolitan areas throughout the country.
The FTSE Nareit PureProperty® indices measure returns of diversified portfolios of unlevered properties in the Apartment, Health Care, Hotel, Industrial, Office and Retail sectors; for the East, Midwest, South and West regions of the United States; and for 11 region/property type combinations. In addition to the property indices representing the returns to unlevered property investments, the FTSE Nareit PureProperty Index Series also includes equity indices measuring the investment returns to properties through the balance sheets of the REITs holding them.
Benefits of daily measures
While indices of property-level returns based on private real estate holdings are computed monthly or quarterly and are published with four to eight-week delays, the FTSE Nareit PureProperty® indices are published on the same day as the returns they measure. Same-day computation provides multiple benefits for investors.
Investment products that provide returns replicating the indices, without significant tracking error, can be developed simply by buying positions in the constituents of a given FTSE Nareit PureProperty index in proportion to their index weights.
Financial instruments can be developed to provide investors with unlevered exposure to one or more segments of the nearly $1.5 trillion of REIT-owned properties by taking positions corresponding to the constituents of a property-level FTSE Nareit PureProperty index, including positions corresponding to fixed-income indices that reflect the cost of debt employed by REITs and that therefore help to correct for the use of leverage by REITs.
Tactical Asset Allocation
The index series supports the creation of investment products that will allow investors to take or adjust positions quickly and efficiently by buying and selling positions corresponding to the constituents and weights of the appropriate FTSE Nareit PureProperty indices, all of which are traded in liquid listed markets.
Hedging and Risk Management
Direct real estate investors will be able to more effectively manage real estate portfolio risks with the immediacy securities investors enjoy. For example, investment products indexed to the FTSE Nareit PureProperty indices will enable investors with large positions in a particular segment of the real estate market to hedge their over-exposure and reduce their real estate portfolio’s concentration risk.
Pulse of the Market
The indices provide valuable insights on a daily basis for developers, brokers, lenders and others who need to monitor the pulse of the real estate market on a timely basis to see how property values have been changing.
Combining holdings corresponding to property-level and equity-level FTSE Nareit PureProperty® indices may enable investors to effectively tailor the amount of leverage in their real estate exposures.
Nareit is not acting as an investment adviser, investment fiduciary, broker, dealer or other market participant, and no offer or solicitation to buy or sell any security or real estate investment is being made. Nareit does not allow any agent, employee or representative to personally solicit any investment or accept any monies to be invested in a particular security or real estate investment.
“FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited (“FTSE”) under license. The Industry Classification Benchmark (“ICB”) is owned by FTSE. All rights in and to the FTSE Nareit PureProperty Index Series vest in FTSE and/or Nareit. Please see ftse.com for additional legal disclosures, index methodology and governance details. Distribution of FTSE data and the use of FTSE indices to create financial products require a license with FTSE and/or its licensors. FTSE is not an investment adviser and makes no representation regarding the advisability of investing in any security/investment
This information is solely educational in nature and is not intended by Nareit to serve as the primary basis for any investment decision. Indices cannot be invested in directly. Inclusion of a security in an index is not a recommendation to buy, sell or hold such security. Index returns do not represent the results of the actual trading of investable assets. Performance results are provided only as a barometer or measure of past performance, and future values will fluctuate from those used in the underlying data. Any investment returns or performance data (past, hypothetical or otherwise) shown herein or in such data are not necessarily indicative of future returns or performance.
All REIT data are derived from, and apply only to, publicly traded securities. While such data are believed to be reliable when prepared or provided, such data are subject to change or restatement. Nareit does not warrant or guarantee such data for accuracy or completeness, and shall not be liable under any legal theory for such data or any errors or omissions therein. See http://reit.com/TermsofUse.aspx for important information regarding this data, the underlying assumptions and the limitations of Nareit’s liability therefor, all of which are incorporated by reference herein.