Understanding Real Estate Performance Measurement & Portfolio Analysis

Understanding Real Estate Performance Measurement & Portfolio Analysis

This course is designed to equip participants with the knowledge and skills necessary to measure, analyse and interpret real estate performance. Through a blend of theoretical concepts and hands-on exercises, participants will gain practical insights into performance measurement, portfolio construction, and attribution analysis, all within the framework of the MSCI Portfolio Analysis Service methodology.

Overall, this course is designed for individuals with a background or interest in real estate investment and portfolio management who seek to develop practical skills in performance analysis and attribution using the MSCI Portfolio Analysis Service methodology.

On this course…

You will learn practical skills in performance analysis and attribution using the MSCI Portfolio Analyst service Methodology.

The course includes:

• Understanding real estate performance measurement.
• MSCI methodology for real estate portfolio analysis.
• Income returns and capital growth.
• Understanding and working with benchmarks.
• Risk assessment techniques and attribution analysis.
• Performance fees structures.
• Further resources about the impact of Climate Change and Tenant risk.

Who will benefit from this course?

• Real Estate Investment Professionals: Real estate fund managers, portfolio managers, analysts, and investment officers seeking to enhance their skills in performance measurement, portfolio analysis, and attribution analysis.
• Real Estate Asset Managers: Professionals responsible for managing and optimising real estate portfolios on behalf of institutional investors, pension funds, REITs, and other asset owners.
• Financial Analysts and Consultants: Individuals working in financial advisory firms, consulting companies, or real estate research organisations who advise clients on real estate investment strategies and portfolio management.
• Institutional Investors: Representatives from pension funds, endowments, sovereign wealth funds, insurance companies, and other institutional investors interested in understanding and improving the performance of their real estate portfolios.
• Real Estate Investment Advisors: Financial advisors and wealth managers specialising in real estate investments, seeking to deepen their knowledge of performance measurement and analysis techniques to better serve their clients.
• Real Estate Developers and Operators: Professionals involved in real estate development, property management, and asset operation who want to gain insights into evaluating the performance of their projects and assets within an investment portfolio context.
• Graduate Students and Researchers: Students pursuing degrees or conducting research in real estate finance, investment, or related fields, looking to broaden their understanding of performance measurement methodologies and their practical applications.

Course Outline

Introduction to Real Estate Performance Measurement

• What is performance measurement?
• Key metrics and indicators for assessing performance.
• Introduction to the MSCI methodology for real estate portfolio analysis.
• Sources of data for real estate performance analysis (valuations).
• Data quality and integrity considerations.
• The distinction between market data and portfolio data (standing investments, transactions and developments).

The Components and Drivers of Total Return

• Identifying the income and capital components of capital growth.
• Income return: From rent passing to net operating income, including incentives, irrecoverable costs and vacancies.
• Capital Growth: Disaggregating the drivers of capital growth (rental growth, yield impact and lease impacts).

Benchmark Selection

• Importance of benchmarking against peers in real estate performance evaluation (impact of investment flows, fund size and regulation).
• EUBMR
• Types of benchmarks and their suitability for different investment strategies.
• Illustration: recent benchmark performance trends.

Risk Measurement Attribution Analysis

• Measures of past return volatility and risk assessment techniques.
• Understanding attribution analysis and its importance in real estate.
• Components of attribution analysis (stock selection, asset allocation, and interaction effects).
• Exercise to perform attribution analysis on sample portfolio.
• Weighted contributions.

Performance Fees

• Overview of performance fee structures.
• Alignment of interests and incentive structures.
• Impact of performance fees on investor returns.
• Best practices in structuring performance fee arrangements.
• Segro Case Study.

Further Readings – The Impact of Climate Change & Tenant Risk

• Data collection, reporting, and analysis.
• Impact – Climate Change.
• Impact – Tennant Risk.

To Conclude

• Recap of key concepts and techniques covered in the course.
• Reflection on the practical applications of real estate performance measurement and portfolio analysis.
• Question and Answer session.
• Resources and further reading recommendations for continued learning.
• Certificate of completion awarded to participants who successfully complete the course.