IRR of funds launched post 2019 turns negative

As real estate markets, particularly in Europe and the USA, continue to react to elevated interest rates, the equally weighted IRR of the 19 funds launched post-2019 decreased by almost eight percentage points to -1.2% in Q2 from 6.7% in Q1. Nine of these funds follow a European-focused strategy and delivered a -12.1% return, the remaining ten funds were invested in the USA and delivered an IRR of 8.6%.

The fifteenth Global IRR Index consultation release monitors 372 closed-end funds across vintages from pre-2003 to 2022. All of these 372 funds follow a non-core strategy as defined by their managers and include 322 value-added and 50 opportunistic funds.

Key highlights: 

• This release of the Global IRR Index features 72 Asia Pacific funds, 142 European and 158 funds focused on the USA.
• The two strongest vintage groups are still represented by funds launched before 2002 and between 2011-2013. They posted average IRRs of 14.7% and 14.2%, respectively.
• The post-2019 vintage group launched immediately before the current downturn delivered the lowest performance with an equally weighted IRR of -1.2%.
• Asia Pacific funds in the 2011-2013 cohort delivered IRRs of 16.2% and outperformed their regional peers. The strongest performance in Europe also came from the 2011-13 cohort with an IRR of 13.4%. However, the best-performing vintage group continues to be the USA’s 2008-2010 cohort which has delivered an equally weighted IRR of 18.7%.

 Download the report, Excel, Snapshot and Supplements below.

The Global Internal Rate of Return (IRR) Index is jointly produced by INREV, ANREV and NCREIF to measure the internal rate of return performance of closed end non-listed real estate vehicles since inception on a global scale. Watch this video with the CEOs of each organisation as they explain how the Global IRR Index benefits the operations of global investors.

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