NCREIF ANALYTICS USE CASE 1

MARKET PERFORMANCE REPORT The US level compares the property type performance of the NPI The Industrial sector in orangehas been outperforming for the past two years. 3

MARKET PERFORMANCE REPORT However, over longer periods, it has performed on par with the NPI The long-term risk measures show the sector to be similar in risk to the overall NPI 4

MARKET PERFORMANCE REPORT Here the long-term return is plotted against annual volatility. Note how the office sector has low alpha. 5

MARKET PERFORMANCE REPORT The momentum graph shows the past 1-yr performance against 3 years avg. Note that Industrial has decreased less than the other sectors. 6

MARKET PERFORMANCE REPORT The Houston Industrial report compares Houston Industrial to Houston Overallto US Industrial to US Overall. Houston Overall has been dropping quickly. Houston Industrial returnshave also slowed The momentum graph shows the fall off in performance of Houston Overall. 8

MARKET PERFORMANCE REPORT This low Beta helps the Houston Industrial to have a higher high Alpha. However, over longer periods, it has out performed The long-term risk measures show lower volatility and lower correlation to the NPI, so it has a low Beta. 9

NCREIF ANALYTICS USE CASE 1 Our Industrial asset in Houston seems to be under-performing Is it a market issue or specific to our asset? What is the cause of the under-performance? Using NCREIF Analytics Is the Industrial sector in the NPI performing well? The under- performance of a Houston industrial asset does not appear to due to the overall Industrial sector. Is the Houston market in the NPI performing well? The under- performance of a Houston industrial asset could be attributed to the overall Houston real estate market. Why might the Houston market under-performing? Lets look at Houston s operating data next.. 10

HOUSTON MARKET OPERATIONS REPORT The Operations Report, displays a series of Key Performance Indicators (KPIs) Vacancy Rates, NOI Growth and Cap Rates For each KPI, a rolling annual line graph, a momentum graph and a table are shown. Industrial Vacancy Rates are below the lows in the last cycle. However, Houston Industrial vacancies are rising. 11

HOUSTON MARKET OPERATIONS REPORT Cap Rates are all below their 00 s lows. Houston Industrial rates are about 50 bps higher than the overall NPI 12

HOUSTON MARKET OPERATIONS REPORT Houston has very high NOI growth. Notice the high seasonal volatility and its lower correlation to the US. This is partially due to smaller sample sizes, but with 68 properties, it s a good sample. 13