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We are excited to share news on IPA's data, research, and education efforts.

Two leading academics have released a groundbreaking study, undertaken with IPA financial support and data provided by Robert A. Stanger & Company, that compares the risk-adjusted performance of nonlisted NAV REITs to public real estate, equity, and bond indices.

Dr. Spencer J. Couts (University of Southern California) and Dr. Andrei S. Gonçalves (The Ohio State University) have published their findings on SSRN. I have highlighted their work in an op-ed published in The DI Wire.


The study confirms that:

  • Private real estate – represented by NAV REITs – “provided economically large alphas over our sample period relative to portfolios of publicly traded indices” of equities, bonds and public real estate.
  • Retail investors can benefit by shifting their investment allocation from publicly traded REITs to NAV REITs.

To ensure the study’s relevance to everyday investors, Drs. Couts and Gonçalves looked at how adding private real estate using a mix of NAV REITs would affect a typical investment portfolio made up of publicly traded REITs, bonds and equities. The authors considered a reallocation of between 5%, 10%, and 20% of the portfolio to NAV REITs. As their study notes:

“NAV REIT indices added substantial (and statistically significant) alpha relative to the public market indices we study over the period of analysis."

According to the study, alphas of NAV REITs over publicly listed REIT indices tend to be positive, large and statistically significant. Moreover, even the worst performing NAV REIT still had a positive and economically significant alpha over publicly listed real estate, bonds and equities.

The risk-adjusted returns of NAV REITs exceeded those of publicly-traded REITs.

“[T]there is a tendency for Sharpe ratios [i.e., a comparison of the return of an
investment with its risk] to increase as we add NAV REIT indices to a portfolio that contains only public market indices.”
“We find that these funds experience the same kind of lagged pricing updates as more traditional private equity real estate funds. However, after accounting for this, we find that a retail investor with a 40%/30%/30% allocation to bonds/equities/public REITs would have realized an alpha of more than 1.0% by shifting 10% of their public portfolio allocation to NAV REITs over the sample period.”
(Professor Spencer Couts)

“We look at the early performance of a new group of NAV-REITs tailored towards retail investors. In doing so, we find that they provided an economically meaningful risk-adjusted return relative to a portfolio of publicly traded indices from 2016 to 2023.”
(Professor Andrei Gonçalves)


The research suggests that NAV REITs can enhance the risk-adjusted performance of the investment portfolios of retail investors.


IPA will be promoting and widely circulating this study, and encourages members to do the same.

Save the date: the IPA will be hosting a webinar with Professors Couts and Goncalves on March 8 at 2 p.m. eastern standard time. Registration for our winter and spring webinars opens later this week.