Income is the principal foundation of real estate investment returns. For most markets and over the longer term, the vast majority of the real estate return comes through income rather than appreciation. The income generating nature of real estate has become even more relevant in an era of ultra-low interest rates, and in the context of the search for yield.
Given the importance of income to investors, increasing attention is being placed on the monitoring of real estate cashflows in order to drive stronger performance and to reduce risks. It is in this context that MSCI has produced the first set of multi-national analyses drawn from its IRIS1 income risk product, providing powerful insights on four main dimensions of income: lease Term Risk, Market Risk, Credit Risk and Concentration Risk.
The results are particularly valuable for portfolio managers and chief investment officers seeking to position portfolios to benefit from improving markets or to build resilience ahead of any downturn. These income characteristics are also critical considerations for acquisition teams through the due diligence process, and for asset managers as they seek to maximize the operational cashflow from individual properties and portfolios.
Source : MSCI - IPD