Results for the 4th quarter and final results for the calendar year 2006 are highlighted by the following:

• Another very strong year for private institutional real estate investment performance, with the all-property total return for CY 2006 at 18.5%. While less than 2005's historical 22-year record high of almost 34%, this still represents an impressive investment performance well above the long-run average. The total return included a 14.5% price gain and a 4% current cash yield (an historically low cash yield rate, reflecting the high prices). The 4th quarter results included 4.3% price gain and 5% total return.
• The leading sectoral performance for the year and the 4th quarter was the office sector, with a 21.1% total return for the year (18% price growth), including very strong 4th quarter results (7.2% total including 6.7% price growth).
• Industrial sector performance was also very strong for the year, at 17.7% total and 13.2% price growth.
• Apartment returns for CY 2006 were modest, at 6.1% total including 2.8% price growth (slightly more than inflation which was 2.5%).
• Institutional retail properties indicate a loss in 2006, with total return of negative 3.8% including a -7.9% price reduction for the year.
• Three of the four property sectors ended the year on a downswing, with at least slight losses in capital value during the 4th quarter (apartments, industrial, & retail). It was the very strong office sector performance that pulled up the overall 4th quarter results.
• Growth in owners' reservation prices on the supply side of the market generally exceeded growth in buyers' demand side reservation prices during 2006 (as tracked by the TBI "demand" and "supply" indexes), suggesting that prices are starting to be supported more by owners' perceptions than by the influx of buyers' capital.

Please note that the TBI is a statistical methodology that produces estimates of price movements and total returns based on transactions of properties sold from the NCREIF Index database.

MIT makes no warranty or claim regarding the usefulness or implications of the index. It should also be noted that TBI results for the 1st, 2nd, and 3rd quarters of any year are considered preliminary and subject to revision until the calendar year is completed with the 4th quarter results.