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Reits likely to see more drops in asset values

Posted on 21 Oct 2009 | Comments Off

Prices of retail and industrial Reits have yet to reflect risks, says Nomura

REAL estate investment trusts (Reits) are likely to experience more drops in asset values and negative rental reversions, a

Furthermore, the research house believes that prices of retail and industrial Reits have yet to reflect these risks.

‘With asset values likely to see further downward adjustments, the fact that retail and industrial Reits are now trading near to or at premiums to book value appears somewhat inconsistent with property market trends,’ wrote analysts Tony Darwell and Sai Min Chow in an Oct 16 report.

Investor interest has returned to Reits in the last few months as the sector largely managed to refinance its loans. The FTSE Real Estate Investment Trust Index has risen by more than 50 per cent since the start of the year.

But Nomura believes that downside risks remain. It estimates that capitalisation rates – a rough measure of properties’ rates of return – have softened by around 25-75 basis points and could drop by another 25-50 basis points. Continue reading →

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Tagged Funds, REAL Estate Investment Trusts, Singapore REITS

Outlook for Aussie Reits improving

Posted on 20 Oct 2009 | Comments Off

The outlook for Australian listed property trusts is improving as the nation’s currency strengthens and the local economy weathers the global recession, according to AMP Capital Brookfield.

Companies that raised capital through share offerings and sales of overseas assets will start to buy real estate assets from local private sellers, said Kim Redding, chief investment officer of AMP Capital Brookfield, a A$6 billion (S$7.7 billion) partnership formed this month between AMP Capital Investors and Brookfield Investment Management to invest in global listed real estate trusts.

‘Australia stands out like a beacon because the yields here are much greater than other parts of the world,’ Chicago- based Redding said at a media briefing in Sydney yesterday. ‘If you like the Aussie dollar and you like yield, Australian LPTs would be a pretty good place to be.’ Australia’s listed property companies are vying to return to profitability after the 16 members of the S&P/ASX 200 A-Reit Index reported combined losses of A$19.5 billion and writedowns of A$21.7 billion in the year to June 30, according to data compiled by Bloomberg. Continue reading →