Portfolio Commentary
The AFL-CIO Building Investment Trust (“BIT”) reported gross and net returns of 2.45% and 2.20%, respectively for the third quarter of 2011. Gross and net returns for the one-year period ended September 30, 2011, were 14.68% and 13.56%, respectively. The third quarter and one-year performance figures trail the NCREIF Open End Fund Index-Equal Weight (“NFI-ODCE-EW”), however the trailing three and five year gross returns exceed the NFI-ODCE-EW by 142 and 77 basis points, respectively.
BIT net property valuation increases totaled $27 million for the third quarter. Valuation gains in office holdings accounted for about 40% of total appreciation. Average discount and terminal cap rates continue to fall for all product types, although at a slower rate than recent periods. A small, vacant industrial building (part of a larger complex) was sold during the third quarter, generating about $3 million in proceeds and removing some vacancy from the portfolio. A few small non-core assets are currently for sale with transactional closing expected for late this year or early 2012.