The CBRE Long Income Index saw a total return of 9.2% in 2018, easily exceeding the 6.3% return from the CBRE Monthly Index of mainstream commercial property.
While Q4 saw mainstream values fall, Long Income capital growth was uninterrupted, rising to 4.4% for 2018. This echoed Long Income’s resilience in Q3 2016, when (unlike the mainstream market) values were unaffected by the vote to Brexit.
Income Strips, the strongest performer of the three investment structures in both 2016 and 2017, performed weakest in 2018, albeit that a 7.6% total return is still compelling. Sale &
Lease Backs reported a total return of 9.2% while Ground Rents delivered the highest total return, at 10.5%.
Long Income IRRs decreased -43bps over the year. Sale & Lease Backs fells -46bps, Income Strips -40bps and Ground Rents -13bps.