Birth of a Company, Part II

To understand the origin story of Accordant Investments, you need to understand how IDR fits into the picture.

But to get to the heart of what makes IDR special and the role it plays, I need to digress a bit and discuss the risks inherent in investing in one-off private real estate (PRE) assets, which is the approach many people choose when they’re looking to add PRE to their portfolios. One way to get at that topic is to share with you some of my experience working in the Middle East back in the early 2010s.

In 2010, I hired was on as the Chief Financial Officer of the Real Estate and Infrastructure Department of a massive sovereign wealth fund (which I will call the “Fund” for brevity’s sake) based in a Middle Eastern country. So it was that, on the day after Thanksgiving that year, my wife and I boarded an airplane, each of us having checked two bags stuffed with our clothes, toiletries, and other necessities, and flew from Dallas, Texas, across nine time zones to what was to become our new home, in the capital of an Islamic country.

I could write a book—maybe several—about all the cool and interesting and funny things we saw and did in our almost three years of living there. But this is obviously not the place for...well, okay, if you insist, maybe just one funny example.

Within a week of my arrival, one of the senior members of our department, a guy who was a native of our host country, walked unannounced into my office, introduced himself curtly and said in his Arabic accented English, “So you’re the new CFO, then?”

I allowed I was, while silently wondering what this guy wanted.

He raised his voice and said, in a dramatic, bombastic tone, “Do you know why we hire expats?”

(“Expats” was the word commonly used to refer to non-natives who worked on the Fund’s staff.)

I looked him in the eye and said in my soft Texas drawl, “Well, I think I’m fixin’ to find out.”

“Three reasons!” he cried, and started counting the reasons off on his fingers.

“ONE! To make us money!” Index finger slammed down on index finger.

“TWO! To show us how to make money!” Index finger slammed down on middle finger.

“And THREE!” Here he paused for dramatic effect before two more fingers made violent contact. “As hostages!”

I just laughed and said, “You know what? You and I are going to get along just fine.”

Okay, back to the business at hand, which is to give you a sense of the challenge I and my team of 15 people from eight different countries faced as we dealt with a sprawling global portfolio that was still somewhat reeling from the Global Financial Crisis of 2008-09.

Our little team was tasked with managing the legal, tax, and financing risk of a portfolio that was spread almost the world over. I personally toured and inspected office and retail in Australia, office and retail in Paris, mixed-use in Stockholm, hotel in Istanbul, hotel and office in London, office development in Shanghai, retail, residential and office in Austin, New York City, Washington, D.C., and San Francisco, and residential and office in Sao Paulo, just to name a few.

Now consider the many kinds of risks involved in owning all those various assets in so many vastly different cities and countries. We had partner risk, legal risk, tax risk, financing risk, currency risk, market risk, leasing risk, operating risk, casualty risk—every flavor of risk it is possible for an asset investor to be exposed to.

In one case, we discovered to our dismay that we owned a portfolio of class B and C office assets in the capital city of an Asian country, acquired just before the onset of the GFC by a previous management team, that was so poorly leased, managed, and maintained as to pose a risk to our reputation as a world-class, global investor. Extracting ourselves from that situation was no mean feat.

It should have come as no surprise, then, that the Fund’s Chief Investment Officer regularly complained to us about how much idiosyncratic risk we owned in our portfolio.

“Just give us the private real estate index,” he would plead. “If we have the index, that’s really all we need real estate to do in our portfolio.”

Now, bear in mind, this was the CIO of one of the world's largest and most powerful pools of capital, which had a senior team of experienced real estate professionals on staff that numbered over one hundred people.

And still, all he wanted was the index.

Which we couldn’t give him.

Because, in the early 2010’s, there was no such thing as an investable index for PRE like there was for stocks or bonds.

And that’s why, when a colleague of mine walked into my office at USAA Real Estate Co. (“Realco” for short) in 2016 and told me that we had been approached by some guys who had developed a process for tracking the index for PRE, I leaned forward in my chair, planted my elbows on my desk and said, “Tell me more.”

The guys in question, who were out of Cleveland, Ohio, were doing business as Investors Diversified Realty LLC (or IDR for short), and were a father and son team named Gary and Garrett Zdolshek. Through hard work and natural smarts, they had indeed developed, and filed for a patent to protect (which they have since received), technology for tracking the PRE index that is the most widely used by the leading U.S. institutional investors for benchmarking the performance of their U.S. PRE portfolios.

That index is called the NFI-ODCE and it is comprised of more than two dozen funds managed by some of the best fund managers in the world—names like J.P. Morgan, Principal, Morgan Stanley, PGIM, AEW and Heitman.

The Zdolsheks approached Realco looking for an investment of seed capital to help them launch what would become the IDR ODCE Index Fund, and I can tell you for a fact that they “had me at hello.” All I could think about was how powerful and effective and, most importantly, cheap (as in low fee drag) such an investment tool would be, not just for my former colleagues at the Fund and similar institutions, but in the fullness of time, to investors in the private wealth and broader retail space.

You see, an investment that tracks the NFI-ODCE Index represents an investment with exposure to a massive pool of assets, nearly four thousand individual properties with a total value of close to $280 billion, diversified by asset type (retail, office, industrial, residential, and a smattering of “other”) and geography, that is conservatively leveraged (currently 26% average loan-to-value) and 91% leased.¹

Tracking the Index does what an investor, whether they be a giant sovereign wealth fund or an average person, needs real estate to do in its/his/her portfolio without the idiosyncratic risk associated with direct asset investing.

In 2017, IDR and Realco made a deal. Realco acquired equity in IDR in exchange for a contribution of the cash that management needed to launch the ODCE Index Fund. In addition, I joined the board of directors of IDR, where I still proudly serve today.

At the time we closed, I predicted that the Index Fund would have $5 billion of assets under management within five years and so it did. Today, it’s AUM is approaching $8 billion,² from investors who include some of the largest and best-known names in institutional investment.

But my personal vision and ambition for the ODCE Index Fund, as an investment opportunity for private wealth and retail investors, would have to wait several years before it would be realized in the form of a partnership between IDR and Accordant.

I’ll turn to that part of the Accordant origin story in my next post.

¹As of 12/31/25

²The IDR Core Property Index Fund (Sister Fund to the Accordant ODCE Index Fund) is the institutional index fund managed by IDR Investment Management, LLC (“IDR”) and AUM is as of 6/30/25

Accordant Investments LLC (“Accordant”) is an SEC registered investment adviser. For more information about our services and disclosures, please visit our website at www.accordantinvestments.com.

This article reflects the personal views and experiences of the author and is provided for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any product or service offered by Accordant Investments or its affiliates. Any such offer or solicitation will be made only through formal offering documents, which describe the terms, risks, and fees associated with an investment. The information contained herein should not be construed as investment advice or a recommendation to buy or sell any security. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. 

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