Indices provider MSCI has launched the first index tracking European real estate debt funds.
The MSCI Europe Quarterly Private Real Estate Debt Fund Index measures 28 funds, which delivered overall returns last year that were better than equity funds.
While the MSCI European Quarterly Property Fund Index returned a negative -9.3% in 2023, the all-debt funds return was 3.7%.
Breaking funds down by lending strategy, whole loan funds delivered the best performance, of 7.4%, while senior loan funds (which make up 53% of the index) returned 5.8%. Subordinated or mezzanine loan funds were in negative territory, producing -8.6%.
The graph above illustrates how senior debt in particular bore out the notion of more stable returns from debt in a period of falling values.
Will Robson, MSCI’s global head of real estate solutions research, said the new index will allow investors to benchmark performance and spots trends in the European real estate debt markets.
The 28 participating funds had a net asset value of €9.2 bn at the end of 2023.
