Professor Charles Tu Co-Authors New Research Study Looking at High Apartment Returns

Thursday, March 15, 2018

The first research study conducted by the National Multifamily Housing Council's (NMHC) recently-formed Research Foundation looks at risk-adjusted returns to apartments versus other CRE asset types.

The study is authored by Mark Eppli of Marquette University and Charles Tu, the Daniel F. Mulvihill Professor of Commercial Real Estate and academic director of the Master of Science in Real Estate program at the University of San Diego School of Business. 

The NMHC website describes the study:
"Over the last three decades, apartments have become a recognized and desired asset class among real estate investors, both domestic and foreign. One reason for the investor interest is that apartment returns have outperformed other property-types. While the underlying characteristics of apartment, office, retail, and industrial properties differ, one might expect that over time, competition would narrow, if not eliminate, apartment return over-performance as apartment returns will mean-revert across time. In fact, apartment returns, on both a risk-adjusted and unadjusted basis, exceed those of other real estate asset types regardless of holding period, geographic region, metro area size and growth rate. The authors find that this stems in part from investors under-estimating capital expenditures for both office and industrial properties."

The study examines a wide range of property and financial market characteristics to explore insights into expected investment returns. One result: acquiring properties immediately after a downturn boosts returns.

Read the study:

The study was also highlighted in the Wall Street