Falling Yields on European REITS Force Investors to Be Choosy

Anticipation of quantitative easing in the euro zone has boosted the values of a host of assets, but few more than real estate investment trusts. This year European listed real estate companies, including REITs, have enjoyed a total return of 17 percent through February 13, far outstripping the region’s bonds and general stock indexes. The FTSE EPRA/NAREIT Developed Europe Index rose strongly before the European Central Bank announced its bond-buying program on January 22, and it kept climbing in February. By reducing bond yields, QE pressures investors to buy riskier, higher-yielding assets such asREITs.

投资者表示，该行业的表现反映了经济前景的改善和廉价融资的可用性。”资产管理公司贝莱德（BlackRock）全球房地产证券部门驻伦敦的欧洲首席信息官詹姆斯•威尔金森（jameswilkinson）表示：“从本质上讲，房地产（包括REITs）是一种顺周期资产类别。”当经济表现良好时，房地产往往表现良好。“利息支出往往是房地产投资信托基金成本的最大部分，威尔金森补充道，他的纽约公司在全球范围内投资了约1000亿美元的房地产投资信托基金。”利息成本已经大幅下降，而且还在继续下降。”。

投资者are keen to get in on the action. In January, ahead of the ECB announcement, Swiss private bank Julius Baer doubled its recommended exposure to REITS for euro-denominated portfolios to 6 percent. “If you are in the right places and property classes, then fundamentally, yes, it’s a very interesting sector,” says Roger Degen, Geneva-based equity analyst for banks, insurance and real estate at the firm, which manages SFr291 billion ($311 billion) in assets.

But most bright investment ideas are valid only for a limited time. The dividend yield on FTSE EPRA/NAREIT Developed Europe, whichincludes the U.K.，从2012年5月的5.5%降至1月30日的2.8%。房地产投资信托基金是否仍具有吸引力？是的，荷兰银行全球投资咨询中心（ABN Amro）驻阿姆斯特丹负责人、首席信息官迪迪埃•杜雷特（Didier Duret）表示€1875亿美元（2130亿美元）私人银行部门。他承认房地产投资信托基金可能存在风险，并指出，“在某个阶段，投资债券也可能风险太大”，因为它们的收益率可能会上升。”这就是为什么我们体重不足，他们说：“杜雷特。他还认为，房地产投资信托基金的风险已经降低，因为它们负债较少。

REITs’ loan-to-value ratios were often as high as 70 percent before the credit crisis, but today they range between 35 and 50 percent for “good-quality names,” Degen of Julius Baer says.

BlackRock’s Wilkinson points out that the underlying real estate market in which European REITs invest doesn’t look overpriced compared with yields on safe government bonds. In many parts of Europe, he says, the sort of properties in which REITs and other institutions invest offers differentials to safe government bonds of 4 percent — above the historical long-term average of 2.5 to 3 percent.

ButREIT investorsconcede that the fall in yields forces them to be much choosier, though they still see strong selective opportunities. “The office cycle in London right now is at a pretty promising stage,” Degen says. “The financial sector is recovering, but there is still a shortage of supply.”

He also likes Unibail-Rodamco, a Paris-based REIT that specializes in shopping malls in mainland Europe. Buoyed by strong rental growth in cities such as Lyon, Paris and Warsaw, its cash earnings per share grew 40 percent between 2007 and 2014.

But there are “a lot of lower-quality REITs which offer lower cash flow growth, or even no growth,” Degen warns. Shopping centers outside prime locations are hard-pressed to raise rents because e-commerce has hurt their business, he says. Wilkinson, who is seeing strong inflows into European real estate, expresses particular interest in REITs in “resilient” U.K. markets outside London, including Cambridge, Manchester and Oxford. He also sees value in Swedish and German residential properties, though these aren’t served by REITs, so they require a different investment structure. “It’s harder to be confident in some parts of the euro zone, including many markets in Italy, Spain, France and the Benelux countries, about whether rents are sustainable,” Wilkinson says. Although financing is cheap, “that’s not always enough.”