NASDAQ OMX today unveiled a new partnership with ETRE Financial for 12 co-branded real estate investment trust (REIT) indexes.
“The NASDAQ ETRE Indexes include five Real Estate Investment Trust (REIT) sector specific Indexes (Residential, Office, Hospitality Healthcare and Retail) and a Composite Index covering the entire equity REIT category. The current family of Indexes is based on US-listed REITs,” according to NASDAQ OMX.
To be included in the indexes, REITs must trade on the NASDAQ or New York Stock Exchange and have minimum market values of $250 million. The indexes are evaluated annually in March.
While most REIT indexes are cap-weighted, the NASDAQ ETRE REIT suite is alternatively-weighted.
“The indexes use ETRE Financial’s unique proprietary Enterprise Value methodology to weight components based on the total value of the underlying properties of the real estate investment trust (REIT), rather than simply the traditional market cap equity value of the component,” according to a statement released by NASDAQ OMX and ETRE.
New York-based ETRE is a pioneer in what it calls exchange traded properties, or single asset REITs listed on national equity exchanges.
The Indexes are weighted upon a modified free floating Enterprise Value metric that utilizes in part the Penrose square root law to provide a formal structure of normalized weighting to the Indexes, according to ETRE.
“A weighting system that incorporates Enterprise Value as the basis for an index more closely approaches the actual performance of the real estate marketplace, and provides a benchmark for single asset exchange traded property valuation,” said ETRE COO and co-founder Jesse Stein in the statement.
The indexes launched at the start of May. The statement did not mention any pending agreements with issuers of exchange traded funds for use of the indexes on new ETFs.
Full List of NASDAQ OMX ETRE REIT Indexes
ETF Trends editorial team contributed to this post.