Press Releases
NPS Develops World’s First Specialty Property Index
Date : 2023/05/08 Hit : 518
Dept. NPSIM Writer NPSIM Contact Point

                                                           

NPS Develops World's First Speciality Property Index

 

- In collaboration with FTSE Russell, the NPS has created an index for niche and non-core real estate sectors -

- The index launch will unlock investments in speciality sector opportunities such as data center, senior care and timber. -


 

 

 

 

 

 

 

The National Pension Service of the Republic of Korea (NPS) has developed the world’s first index for niche and non-core real estate sectors, opening up new investment opportunities in the real estate market.


 ○ The National Pension Service Investment Management (NPSIM; Chief Investment Officer, Seo Won-joo) said on May 2, 2023 that together with FTSE Russell, a subsidiary of the London Stock Exchange Group, the NPS created the ‘FTSE EPRA Nareit Developed Extended Opportunities RIC 6/45 Capped Index’ in November 2022, and has since utilized it as a global benchmark.


This newly launched index is designed to complement a real estate portfolio predominantly composed of traditional property types such as offices and retail.


 The index extends beyond core real estate property sectors, and additional securities broaden inclusion further than the FTSE EPRA Nareit Developed Indexes.


 It is currently being offered to various investors in the real estate market, alongside the NPS.

 

The distinct feature of the index is that it focuses solely on niche and non-core property sectors*, exclusive of traditional sectors of real estate.

 

     * Including data center, self-storage, senior care, life science, timber, single family, manufactured homes, medical office building, student housing, etc.


 ○ Given that they have greater potential to grow than traditional sectors and low correlation with the economic cycle, niche and non-core real estate markets are viewed as new attractive investment opportunities.


 Despite the high interest and demand for the specific sector exposures, investments have not been active enough due to the absence of relevant benchmark solutions.


Against the backdrop, the NPS engaged with FTSE Russell to develop an index for niche non-core property exposure sectors. As a consequence, the new index was launched in November 2022, and has since been added to FTSE Russell’s standard index series.


 ​The index solution enables market participants to gain exposure to niche and non-core real estate sectors and track the market performance.


 Kim Joo-seong, senior portfolio manager who took the lead in creating the index at the NPS, said: “The increasing demand for investing in niche and non-core property sectors led us to initiate the discussion of the development of the benchmark index to define the sectors and evaluate the market performance.”


It is expected that the index will assist the NPS in taking the first mover advantage in the market and enhancing return prospects.


 The index will be used by the NPS as part of its portfolio completion strategy, with a total of $1 billion assets under management allocated.


 The index currently has 70 constituents across ten countries, including the United States, the United Kingdom, Australia, Belgium, Canada and Singapore, and had a dividend yield of 4.05%* as of March 31, 2023.
     * Based on the 12-month period ending on March 31, 2023


Seo Won-joo, CIO of the NPS, said: “This new index will play a key role in diversifying our real estate portfolio.”


 The index not only provides immediate access to a broader set of specialty sector opportunities but will also greatly enhance the risk-adjusted return of the entire portfolio in the long run.”

Attached file [Press Releases] NPS Develops World’s First Specialty Property Index.pdf
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