Return metrics for large portfolio
Hi there,

Was wondering what metrics (ROE, ROIC, etc.) might be appropriate for a larger portfolio of stabilized commercial retail assets. Let’s assume they are fairly leveraged and have been purchased at various times throughout the last 20 years. 

My intent is come up with some metrics of how to show shareholders the value creation.

Thank you kindly
[{"id": "fnmk4ju", "text": "Sounds like any basic spreadsheet app with the auto graph/chart generation feature will do what you need. Vacancies should spike once rainy day and stim money runs dry. May also want to project how long they can hold out before going belly up. In short, instead of selling value creation, you can sell asset depreciation.", "replies": [], "depth": 1}, {"id": "fnmv1o0", "text": "I would consider IRR and NPV as some basic metrics. The issue is going to be capturing the  appreciation element right now. The Loan to Value ratio may be an important discussion point given market conditions. ROE could also be used. May also want to do comparisons of the portfolio return against some of the larger REITs - prologis eg.", "replies": [], "depth": 1}, {"id": "fnn3pnh", "text": "Look at NCREIF income and appreciation returns - they should have how theyre calculated on their website (or if not they probably sell a book on it) - what you want are the time weighted returns for the portfolio. Take that, run it back (assuming you have all 20 years of data) and compare it to the ODCE index (assuming you\u2019re low leverage which I\u2019m guessing you are). You now have a measuring tape and a benchmark to compare it to. Even if it\u2019s sector specific portfolio firms still compare their core product to the diversified index.", "replies": [], "depth": 1}]