How accurate are commercial-real-estate appraisals? evidence from 25 years of NCREIF sales data

In this study, we provide new evidence on the performance measurement and reporting of commercial real estate returns. We do so by examining the accuracy of commercial-real-estate appraisals that occurred prior to the sale of properties from the NCREIF National Property Index (“NPI”) during 1984 – 2010, a period which spans two up-and-down cycles of the market. We find that, on average, appraisals are more than 12% above, or below, subsequent sales prices that take place two quarters following the appraisal. Even in a portfolio context, allowing for offsetting positive and negative differences, appraisals are off by an average of 4% – 5 % of value, even after adjusting for capital appreciation during those two quarters. We also provide new evidence regarding how, and by how much, appraised values lag behind sales prices. We find that appraisals appear to lag the true sales prices, falling significantly below in hot markets and remaining significantly above in cold markets. This new evidence provides guidance to investors, regulators and others about how to interpret real-estate indices like the NPI that are based upon appraised values, in both a rising and falling market. Finally, we find that this “appraisal error” is largely systematic; we can explain more than half of the variation in the signed percentage difference in sales price and appraised value. Hence, appraisal errors are not due solely to property-specific heterogeneity.appraisal; commercial real estate; commingled real estate fund; NCREIF; real estate

How Accurate Are Commercial Real Estate Appraisals? Evidence from 25 Years of NCREIF Sales Data

In this study, we provide new evidence on the performance measurement and reporting of commercial real estate returns. We do so by examining the accuracy of commercial-real-estate appraisals that occurred prior to the sale of properties from the NCREIF National Property Index (“NPI”) during 1984 – 2010, a period which spans two up-and-down cycles of the market. We find that, on average, appraisals are more than 12% above, or below, subsequent sales prices that take place two quarters following the appraisal. Even in a portfolio context, allowing for offsetting positive and negative differences, appraisals are off by an average of 4% – 5 % of value, even after adjusting for capital appreciation during those two quarters. We also provide new evidence regarding how, and by how much, appraised values lag behind sales prices. We find that appraisals appear to lag the true sales prices, falling significantly below in hot markets and remaining significantly above in cold markets. This new evidence provides guidance to investors, regulators and others about how to interpret real-estate indices like the NPI that are based upon appraised values, in both a rising and falling market. Finally, we find that this “appraisal error” is largely systematic; we can explain more than half of the variation in the signed percentage difference in sales price and appraised value. Hence, appraisal errors are not due solely to property-specific heterogeneity

How Accurate Are Commercial Real Estate Appraisals? Evidence from 25 Years of NCREIF Sales Data

In this study, we provide new evidence on the performance measurement and reporting of commercial real estate returns. We do so by examining the accuracy of commercial-real-estate appraisals that occurred prior to the sale of properties from the NCREIF National Property Index (“NPI”) during 1984 – 2010, a period which spans two up-and-down cycles of the market. We find that, on average, appraisals are more than 12% above, or below, subsequent sales prices that take place two quarters following the appraisal. Even in a portfolio context, allowing for offsetting positive and negative differences, appraisals are off by an average of 4% – 5 % of value, even after adjusting for capital appreciation during those two quarters. We also provide new evidence regarding how, and by how much, appraised values lag behind sales prices. We find that appraisals appear to lag the true sales prices, falling significantly below in hot markets and remaining significantly above in cold markets. This new evidence provides guidance to investors, regulators and others about how to interpret real-estate indices like the NPI that are based upon appraised values, in both a rising and falling market. Finally, we find that this “appraisal error” is largely systematic; we can explain more than half of the variation in the signed percentage difference in sales price and appraised value. Hence, appraisal errors are not due solely to property-specific heterogeneity

How accurate are commercial-real-estate appraisals? evidence from 25 years of NCREIF sales data

In this study, we provide new evidence on the performance measurement and reporting of commercial real estate returns. We do so by examining the accuracy of commercial-real-estate appraisals that occurred prior to the sale of properties from the NCREIF National Property Index (“NPI”) during 1984 – 2010, a period which spans two up-and-down cycles of the market. We find that, on average, appraisals are more than 12% above, or below, subsequent sales prices that take place two quarters following the appraisal. Even in a portfolio context, allowing for offsetting positive and negative differences, appraisals are off by an average of 4% – 5 % of value, even after adjusting for capital appreciation during those two quarters. We also provide new evidence regarding how, and by how much, appraised values lag behind sales prices. We find that appraisals appear to lag the true sales prices, falling significantly below in hot markets and remaining significantly above in cold markets. This new evidence provides guidance to investors, regulators and others about how to interpret real-estate indices like the NPI that are based upon appraised values, in both a rising and falling market. Finally, we find that this “appraisal error” is largely systematic; we can explain more than half of the variation in the signed percentage difference in sales price and appraised value. Hence, appraisal errors are not due solely to property-specific heterogeneity

Changes in REIT liquidity 1988 - 2007: Evidence from daily data

In this study, we present panel-data evidence on REIT liquidity and its determinants over the 1988 – 2007 period. We focus upon liquidity measures that do not require micro-structure data (1) to facilitate use of our results as benchmarks for comparisons with results from international markets for which micro-structure data may be unavailable, (2) to provide benchmarks that do not require access to costly (and voluminous) micro-structure data. We find that REIT liquidity improved during the early and mid-1990s, deteriorated during the late 1990s, and then improved dramatically during 2000 – 2006, with the notable exception of 2007. Liquidity improved the most for REITs traded on the NYSE, and was an order of magnitude better than liquidity of REITs traded on the AMEX or NASDAQ. We link the deterioration in liquidity observed in 2007 to the investment portfolio of a REIT. We find that the percentage bid-ask spread is highly correlated with the measure of price impact proposed by Amihud (2002). We provide panel-data evidence on the key determinants of the percentage bid-ask spread that largely confirms the results reported by Bhasin, Cole and Kiely (1997) for 1990 and 1994: the percentage spread is a positive function of the volatility of stock returns, and a negative function of dollar volume turnover, share price and market capitalization. Finally, we provide evidence that these results obtained using daily closing bid- and ask-prices are not qualitatively different from those obtained using market micro-structure data. This suggests that we can use liquidity measures based upon readily available daily return data rather than being forced to rely upon market micro-structure data

Specific Mechanisms underlying Right Heart Failure

AIMS: Research into right ventricular (RV) physiology and identification of pathomechanisms underlying RV failure have been neglected for many years because function of the RV is often considered to be less important for overall hemodynamics and maintenance of blood circulation. In view of this, the present study focuses on identifying specific adaptive mechanisms of the right and left ventricle (LV) during a state of chronic nitric oxide (NO) deficiency, one of the main causes of cardiac failure. NO deficiency was induced in rats by L-NAME feeding over a four weeks period. The cardiac remodeling was then characterized separately for the RV/LV using qRT-PCR, histology, and functional measurements. RESULTS: Only the RV underwent remodeling that corresponded morphologically and functionally with the pattern of dilated cardiomyopathy. Symptoms in the LV were subtle and consisted primarily of moderate hypertrophy. A massive increase in reactive oxygen species (ROS) (+4.5+/-0.8 fold, vs. control) and a higher degree of oxidized tropomyosin (+46+/-4% vs. control) and peroxynitrite (+32+/-2% vs. control) could be identified as the cause of both RV fibrosis and contractile dysfunction. The expression of superoxide dismutase-2 was specifically increased in the LV by 51+/-3% and prevented the ROS increase and the corresponding structural and functional remodeling. INNOVATION: This study identified the inability of the RV to increase its antioxidant capacity as an important risk factor for developing RV failure. CONCLUSION: Unlike the LV, the RV did not display the necessary adaptive mechanisms to cope with increased oxidative stress during a state of chronic NO deficiency

Loss and damage livelihood resilience

Climate change Loss and Damage has emerged as a key challenge of the 21st century. This Policy Brief first frames the challenge and then introduces the Resilience Academy, highlighting 5 key insights that both feed the debate and inform action. Finally, it provides 5 recommendations to the Executive Committee of the Warsaw International Mechanism (WIM ExCom) for its 5-year work plan

Impaired working speed and executive functions as frontal lobe dysfunctions in young first-degree relatives of schizophrenic patients

The aim of the investigation was to detect neuropsychological markers, such as sustained and selective attention and executive functions, which contribute to the vulnerability to schizophrenia especially in young persons. Performance was assessed in 32 siblings and children of schizophrenic patients and 32 matched controls using Wisconsin Card Sorting Test, Colour-Word-Interference-Test, Trail Making Test, and d2-Concentration-Test. The first-degree relatives showed certain impairments on all four tests, in particular, slower times on all time-limited tests. These results suggest the need for more time when completing neuropsychological tasks involving selected and focused attention, as well as cognitive flexibility, as a possible indicator of genetic vulnerability to schizophrenia

Turning the Table: Plants Consume Microbes as a Source of Nutrients

Interactions between plants and microbes in soil, the final frontier of ecology, determine the availability of nutrients to plants and thereby primary production of terrestrial ecosystems. Nutrient cycling in soils is considered a battle between autotrophs and heterotrophs in which the latter usually outcompete the former, although recent studies have questioned the unconditional reign of microbes on nutrient cycles and the plants' dependence on microbes for breakdown of organic matter. Here we present evidence indicative of a more active role of plants in nutrient cycling than currently considered. Using fluorescent-labeled non-pathogenic and non-symbiotic strains of a bacterium and a fungus (Escherichia coli and Saccharomyces cerevisiae, respectively), we demonstrate that microbes enter root cells and are subsequently digested to release nitrogen that is used in shoots. Extensive modifications of root cell walls, as substantiated by cell wall outgrowth and induction of genes encoding cell wall synthesizing, loosening and degrading enzymes, may facilitate the uptake of microbes into root cells. Our study provides further evidence that the autotrophy of plants has a heterotrophic constituent which could explain the presence of root-inhabiting microbes of unknown ecological function. Our discovery has implications for soil ecology and applications including future sustainable agriculture with efficient nutrient cycles