An Analysis of Recent Rates of Return and of the Secondary Market for Public Real Estate Limited Partnerships

This study analyzes the rates of return of 53 Real Estate Limited Partnerships (RELPs). The authors utilize market-derived figures for terminal values, thus providing more realistic computations of IRRs than have appeared in other studies. The authors also examine the effect of holding period on RELP returns. RELP IRRs were found to be significantly different from those reported in other studies. RELP IRRs were also found to be highly correlated to holding period. The authors also provide an extensive introduction to the relatively new and evolving secondary market for RELPs called the National Partnership Exchange (NAPEX).

Public Real Estate Limited Partnership Returns: A Preliminary Comparison with Other Investments

Real Estate Limited Partnership (RELP) securities have attracted substantial investor interest, but limited research study. This paper, utilizing a very recent database of actual RELP secondary market transactions, provides preliminary evidence regarding the relative performance of RELP securities, as well as the interrelationships between RELP returns and the returns of Treasury bills and bonds and common stock. Results suggest that RELP returns are negatively correlated with common stock returns, but are positively correlated with the rate of inflation. RELP returns do not consistently exceed the rate of inflation nor do they exceed common stock returns. RELP returns also failed to outperform a broadly-based income property index. Copyright American Real Estate and Urban Economics Association.