MAY 2007 VOL. 2

Did You Know…

The commercial property derivatives market in the United States is not based off of any one specific index at this time. Unlike the United Kingdom, where the IPD Index is the exclusive index, four very different indices are being debated within the U.S.

The National Council of Real Estate Investment Fiduciaries (NCREIF) has licensed its property index to several investment banks. The index, known as the NPI, is at the forefront because it is familiar to institutional investors and widely used to benchmark returns within the institutional investment community. It is appraisal-based and covers only about 7 percent of the total commercial property inventory in the U.S.

The three additional indices are produced by Global Real Analytics (GRA); Real Capital Analytics (RCA) and Rexx Index LLC. GRA's index was developed through a partnership with Standard & Poor’s and is based on average sales price per square foot. The RCA indices are derived from repeat sales of properties in its transaction database. In contrast, the Rexx Index is based on metropolitan area rents.