REITs showing signs of recovery
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Real estate investment trusts (REITs) have begun showing signs of recovery thanks to a gradual return in investor confidence, according to the head of investment strategy at AMP Capital Investors, Shane Oliver.
The improving lender confidence will ease the financial pressure REITs are under, with the sector able to raise $14 billion since September to reduce their debts. REITs have gained 39 per cent of their former value over the last three months.
However, after a sector slump of 80 per cent since 2007, it will be a long time before investors in the sector regain their former confidence, according to Oliver. United States REITs fell by 77 per cent and Australian REITs by 55 per cent in March compared to their highest performance in 2007. The sector in Australia is still trading at a 49 per cent discount to the value of net tangible assets.
The increasing concentration of the Australian REIT sector will also lead investors to rely more on global listed property, he said.
AUTHOR
Benjamin Levy
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