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Spaulding Award Winner’s announced at 2014 Back to School – NYC

This past weekend at 2014 Back to School – NYC Professor David Geltner presented Catherine Polleys ’97, Principal, Aon Hewitt  and Mark Robert ’94, Managing Director, Deutsche Asset & Wealth Management, Alternatives and Real Assets (f.k.a, RREEF) the 2014 Spaulding Award for their collaboration on the development of the NCREIF Open-End Diversified Core Equity Index (NFI-ODCE) as well as other management and administration duties of the National Council of Real Estate Investment Fiduciaries.


Project/Work Submission:

Development of the NCREIF Open-End Diversified Core Equity Index (NFI-ODCE) as well as other management and administration duties of the National Council of Real Estate Investment Fiduciaries.

Both Catherine Polleys ’97 and Mark Roberts ’94, working together with other notable industry professionals, such as Joe D’Alessandro (NCREIF contractor), Stephanie Brower (Russell Company), Neil Myer (posthumously from The Townsend Group and also a NCREIF contractor) and Blake Eagle (President of NCREIF), produced the first investable benchmark for non-listed real estate.


Why is the nomination noteworthy?

The NFI-ODCE was initially released in the first quarter of 2005 and provided performance information of open-end funds dating back to 1978.  Prior to the introduction of the NFI-ODCE, investors mainly used the NCREIF Property Index to benchmark performance.  This index has a wealth of information that has and continues to suit many institutional investors and investment management firms.  However, given the composition of this index, it presented some challenges to the real estate industry as the index was not in the truest sense an investable benchmark because an investor could not obtain exposure and receive the investment performance of the entire index.

The NFI-ODCE overcame these challenges by combining the performance of certain open-end funds.  At inception, the index combined the performance results of 14 active open-end funds as well as the historical performance of over an additional dozen funds.  Given the strict standards that were developed, institutional investors and investment management firms embraced the NFI-ODCE.  At its inception, none of the benchmark’s founders could envision the credit crises that would ensue in 2008.  Nevertheless, due to the rigor of its development and the standards developed, the NFI-ODCE has stood the test of time and has grown to include 21 active open-end funds and reflects the fund-level performance of assets which exceed $136 billion in gross asset value.


Which constituents benefited?

The NFI-ODCE index is used by investment management firms and institutional investors world-wide from Asia-Pacific, the Middle East, Europe and across North America to benchmark the performance of their real estate investments.  Because of the consistency and transparency, the index is used for a number of purposes ranging from asset allocation, peer group performance measurement as well as performance fee analysis.  Not only do real estate market participants use the index, it is also used by regulators and educational institutions to analyze and to gauge the health and current conditions in the real estate market in the United States.  The success of this index has led to similar advancements in benchmarking by other non-profit and for-profit organizations in various regions of the globe.


Examples of challenges that had to be overcome: How? Why? 

To launch the index, one of the greatest challenges was to seek agreement on the reporting requirements as well as the inclusion and exclusion rules from over a dozen investment management firms.  The team analyzed the generally accepted style of investing over the years by arduously combing through the financial history of open-end funds.  This analysis ultimately led to a recommendation and consensus amongst the initial active open-end fund managers.  In addition to agreeing upon the performance standards, these firms also had to agree to the inclusion and exclusion rules. Obviously what was at stake for these firms was that their performance was going to be judged more closely against their peers.  In addition, the composition and style was also going to be more closely scrutinized.  Thanks to the efforts of the team and the NCREIF staff, agreement on these issues was reached in late 2004.

Another challenge had to be overcome during the credit crisis when values declined and loan-to-value ratios increased. In a few instances, the LTV increased to a level that exceeded the allowable limits of the index.  In these instances, notice was given to both the firms and the industry that the Index Policy Committee for the NFI-ODCE would exclude these funds if they did not align their balance sheet with the required inclusion rules.  By this time, both Catherine Polleys and Mark Roberts served on the Board of NCREIF and continued to serve on the Index Policy Committee of NCREIF.  Having played an important role in the development of the index, Cate and Mark worked together and sought agreement from the NCREIF board to expel these funds if they did not resolve their balance sheet issues in order to maintain the integrity of the index.  This position cause these funds to restructure their balance sheet so they could stay in the index.  This discipline led to additional credibility for both the index, NCREIF and the institutional investment industry at large.


Other industry advancements?

In addition to their efforts in the developing the NFI-ODCE, both nominees have also served as head of the Research Committee at NCREIF as well as serve on the Board and as Board Chairs for NCREIF.  They also have distinguish careers with their firms.

During her tenure as board chair, Catherine Polleys led the advance of a number of items such as reorganizing the by-laws and governance structure of NCREIF, overseeing the staff and leading the effort to produce additional indices, such as the All Open-End index.

During his tenure, Mark also led a number of initiatives such as restructuring the business initiatives and governance of the Real Estate Information Standards, which is a joint effort between PREA and NCREIF, developed affiliations with Inrev (Europe) and Anrev (Asia-Pacific) to produce a global open-end fund index as well as additional initiatives which are currently in progress.

In closing, the nominees recognize they could not have accomplished these efforts alone without the efforts of their team members as well as the NCREIF staff, the collaboration of a number of investment managers and also the support of Blake Eagle.  The nominees are clearly grateful for the educational, leadership and values established by Hank Spaulding and fostered by the Center of Real Estate as these provided a foundation for us to achieve these advancements in the industry.


Presentation at 2014 Back to School-NYC