No Need to Call the Bottom

Examining Fund Vintage in the U.S.

Global CIO David Steinbach and Head of Global Research Joshua Scoville examine vintage timing

Investors may assume funds launched at the bottom of the market achieve the most compelling returns over the subsequent cycle; but historically some of the strongest returns have been generated by funds launched in years where property values are still declining1.

No Need to Call the Bottom

Joshua Scoville
Head of Global Research

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A key reason is a consistent disconnect between appraised and actual transaction values during any given downturn, allowing funds to achieve “market beating” returns on those discounted opportunities.

While this analysis focuses on the US, the findings may have application to real estate investment experience outside the US. In all these property markets, US and outside the US, private real estate values are appraised. It is likely that during inflections in the market, appraisals lag actual market values for transactions, both on the downcycle and upcycle. It is likely that shared phenomenon that explains, at least partially, why funds launched even during periods of falling appraisal values have historically achieved competitive and often cycle-leading returns.

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1 Source: Preqin, NCREIF, Hines Research. As of December 2023.


The content herein and in the report is provided for informational purposes only. Nothing above or in the report constitutes investment, legal, or tax advice or recommendations. Such content should not be relied upon as a basis for making an investment decision and is not an offer of advisory services or an offer to invest in any product or asset class. It should not be assumed that any investment in an asset class described herein will be profitable. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice. Opinions or beliefs expressed in these materials may differ or be contrary to opinions expressed by others. Certain information above and in the report has been obtained from third-party sources. Hines has not independently verified such information.