Glossary

Performance Attribution

Also known as: Return Attribution

The decomposition of a real estate portfolio's total return into component drivers — such as property-type allocation, market or geographic allocation, and asset-level selection relative to a benchmark — to isolate how much of performance reflects manager skill versus passive exposure to favorable sectors or markets.

Real estate performance attribution adapts the allocation-versus-selection framework used in public equity attribution: allocation effect measures the return contribution from overweighting or underweighting a property type or market relative to the benchmark's composition, while selection effect measures the return contribution from how the manager's specific assets performed relative to the benchmark segment they compete within. The distinction matters directly to manager due diligence — a manager who outperformed primarily by being overweight a sector that happened to rally (say, industrial during a period of strong logistics demand) has a different, less durable skill profile than one who outperformed through superior leasing execution and operating decisions within a given sector — but the analysis is complicated in real estate relative to public equities by appraisal lag and infrequent valuation, which can blur the timing of when a manager's allocation or selection decisions actually show up in reported returns.