I promise there will be no Greek symbols in this article. In fact, there is virtually no mathematics at all. Rather, this column is going to try to deconstruct just what real estate professionals mean when they talk about risk-adjusted returns and provide some commentary on the various uses.

In my experience, there are a few general uses of the phrase “risk-adjusted returns” by real estate professionals and they are not consistent with each other. One use comes in the context of asset allocations. In this context, risk-adjusted returns for private real estate are compared to the risk-adjusted returns for other asset classes. And, strangely enough, real estate tends to look good “on a risk-adjusted basis” in most of the studies I have seen, although that may have as much to do with the fact that I am seeing the studies produced by and for real estate people as it has to do with relative risk-adjusted returns.

But there is one thing I can say about these studies: