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MSCI releases global private real estate risk model

MSCI Inc. (NYSE: MSCI) said it has launched the new Barra Private Real Estate Model (PRE2), the industry´s first global private real estate multi-factor risk model.

“Until now it has not been possible to measure and compare the risks of global real estate with other asset classes,” said Roveen Bhansali, managing director and head of risk management analytics for MSCI. “This new private real estate model represents a major step forward by expanding coverage to 31 countries and putting it in a global, multi-asset class context.”

The Barra PRE2 model incorporates global private real estate data from IPD, a provider of real estate performance and risk analysis, acquired by MSCI just over a year ago. PRE2 provides clients with the most extensive coverage of private real estate risk available in the market to date. It also provides a consistent methodology for modeling global private real estate and seamless integration with MSCI´s premier multi-asset class fundamental factor model, the Barra Integrated Model (BIM), which includes both public and private real estate.

The IPD dataset also allows managers to overcome the challenge of using public equity to represent private real estate. It shows that public equity markets and private real estate are not always correlated. For example, the relationships between New York real estate and financial stocks, Houston real estate and energy stocks or San Francisco real estate and technology stocks all have very low statistical significance.

MSCI is a provider of investment decision support tools to investors globally, including asset managers, banks, hedge funds and pension funds. MSCI products and services include indices, portfolio risk and performance analytics, and governance tools. The company´s website is at


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