- Global commercial real estate is undervalued compared to U.S. commercial real estate.
- Investors who own domestic real estate should consider reallocating some of their holdings to international real estate.
- Not only is global real estate a good value, it could also help to diversify your portfolio.
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Wed, Jan. 21, 3:14 PM
- Equity REITs had a nice run after bond yields peaked last year and began declining, but, says a now-cautious John Authers from the FT, that rally has turned into a stampede. And while the U.S. has led the way, U.K., European, and global REIT indexes have also had big gains.
- Since October, the S&P 500 REITs index is up 19% vs. 1.4% for the S&P 500, and a 22.5% loss for the Alerian index of MLPs.
- Valuation has now become a concern, with every REIT sector covered by SNL Securities trading at a premium to NAV (not the mortgage REITs though). Healthcare REITs - HCP, MPW, HTA, UHT, LTC, SBRA, OHI, HCN come to mind - are at a 25% premium.
- SNL's Jason Lail dismissed some concerns, noting REITs trade at a 12.% premium to NAV, well within the 20% above and below NAV they typically range between. Also, fundamentals remain sound, with supply still constricted in many areas.
- JPMorgan's Jason Ko notes pockets of value, particularly office REITs which trade a minimal premium. Boston Properties (BXP -0.1%) is a particular favorite. Others in the sector include: EQC, WRE, CSG, FPO, HIW.
- Simon Property (SPG +0.2%) is Ko's biggest holding as mall bankruptcies and chain closings should leave the survivors stronger. His 2nd-largest holding is industrial player ProLogis (PLD +0.2%).
- ETFs: IYR, VNQ, WPS, VNQI, DRN, RWX, URE, SRS, ICF, SCHH, RWR, RWO, IFGL, KBWY, DRV, DRW, REK, FRI, GRI, IFEU, FTY, FFR, RWXL, PSR, IFNA, WREI, REET
Dec. 1, 2014, 1:06 PM
- Noting the U.S.-listed REIT index remains 15% below its 2007 peak, Blackstone's (NYSE:BX) property arm chief Jon Gray says the private-equity firm is on the lookout for REITs to take private.
- It wouldn't be the first time for Blackstone, which busily bought up real estate - Sam Zell's Equity Office Properties in 2007 being notable - prior to the financial crisis, and made a fortune despite the crash.
- ETFs: IYR, VNQ, WPS, VNQI, DRN, RWX, URE, SRS, ICF, RWR, SCHH, RWO, IFGL, DRV, KBWY, DRW, REK, FRI, GRI, FTY, FFR, RWXL, PSR, EMRE, WREI, REET
Oct. 10, 2014, 11:42 AM
- The FTSE NAREIT All REITs Index gained 13.08 during the year's first nine months, and had a dividend yield of 4.31% as of September 30. The S&P 500 had a total return of 8.34% over the same period, and a dividend yield of 2.06%.
- The big YTD performance comes even after a 2.63% decline in the just-ended Q3 (vs. the S&P's 1.13% decline).
- Apartment REITs (EQR, AVB, ESS, PPS, UDR, to name a few) have been the biggest winner so far this year, with total return of 20.29% In second place at 16.76% are self-storage REITs (PSA, SSS, CUBE, EXR).
- Mortgage REITs (REM, MORT, MORL) had a total return of 12.69%.
- Broad REIT ETFs: IYR, VNQ, WPS, VNQI, DRN, RWX, URE, SRS, RWR, SCHH, ICF, RWO, IFGL, DRV, KBWY, DRW, REK, FRI, GRI, FTY, FFR, RWXL, PSR, WREI, REET
Oct. 9, 2014, 12:21 PM
- A check of 900 corporate and public defined benefit plans between 1998 and 2011 found listed equity REITs - with an average annual net return of 11.31% - edged out private equity (11.1%) as offering the highest net returns of any asset class, according to a soon-to-be-released report from CEM Benchmarking.
- Coming in third were real assets other than real estate - infrastructure, commodities, natural resources - at 9.85%.
- Why start in 1998? That's when CEM first began separating REITs from stocks in its surveys.
- Costs are of key import. The average fee for REITs over the period was 51.6 basis points vs. 238.3 bps for P-E, and 102.6 bps for "other" real assets. U.S. broad fixed income had the lowest costs - just 17.3 bps - but produced an average net return of just 6.56%.
- ETFs: IYR, VNQ, WPS, VNQI, DRN, RWX, URE, SRS, RWR, SCHH, ICF, RWO, IFGL, DRV, KBWY, DRW, REK, FRI, GRI, FTY, FFR, RWXL, PSR, WREI, REET
Sep. 29, 2014, 1:29 PM
- The Guggenheim Emerging Markets Real Estate ETF (NYSEARCA:EMRE) will offer investors exposure to companies and REITs that develop, manage or own properties in emerging markets.
- With an expense ratio of 0.65%, EMRE is on the more expensive end of real estate ETFs, but it is also the first fund to focus specifically on the opportunities in emerging markets.
- Other global real estate ETFs: WPS, VNQI, RWX, RWO, IFGL, DRW, GRI, FFR, RWXL, REET
Sep. 23, 2014, 11:17 AM| Comment!
Sep. 15, 2014, 12:16 PM
- REIT investors worried about the link - and it's a close one of late - between interest rates and the value of REIT stocks (they go down when rates rise, up when rates fall) might want to take a look at non-U.S. REITs, where the correlation is far lower, says AllianceBernstein's Eric Franco.
- Another advantage of non-U.S. REITs - their ratio of cash flow yield to bond yields is well above the long-term average, i.e. they're cheap. The ratio for U.S. REITs is right at the long-term average.
- Broad U.S. REIT ETFs: IYR, VNQ, DRN, URE, SRS, RWR, ICF, SCHH, DRV, KBWY, REK, FRI, FTY, PSR, WREI
- Global REIT ETFs: WPS, VNQI, RWX, RWO, IFGL, DRW, GRI, IFEU, FFR, RWXL, REET
Sep. 5, 2014, 3:16 PM
- Comparing "round-trip total returns" on 34 non-traded REITs with those of their publicly-listed peers, Green Street Advisors found the non-traded vehicles lagged the public ones by an average of 360 basis points per year.
- It turns out the key selling point of non-traded REITs - since they're not priced on a regular basis (sometimes for years at a time), they lack volatility, and therefore allow investors to sleep better at night - is actually their weakness.
- "The institutional investment community has convinced itself that the short-term volatility that necessarily accompanies liquidity equates to higher long-term risk," says Green Street. "In other words, liquidity is a bad thing ... Logic like that would conclude that the best way to avoid unpleasant medical news is to never visit the doctor.”
- ETFs: IYR, VNQ, WPS, VNQI, DRN, RWX, URE, SRS, ICF, RWR, SCHH, RWO, IFGL, DRV, KBWY, DRW, REK, FRI, GRI, FTY, FFR, RWXL, PSR, WREI
Jul. 29, 2014, 3:20 PM
- The FTSE Nareit All REITs Index posted a total return of 16.14% in H1 and offered a 4.03% dividend yield as of June 30. Equity REITs were up 16.25% with a dividend yield of 3.52%. The S&P 500, by comparison, had a total return of 7.14% and a dividend yield of 2% on June 30.
- The top-performing equity REIT sector was the apartments with a 23.54% total return, while Office REITs delivered 17.78%. Closely behind were Health Care REITs and Lodging/Resort REITs at 17.59% and 17.26%, respectively, then Retail REITs at 15.97%.
- The Mortgage REITs Index was up 17.73% in H1, with commercial financing up 14.03% and residential up 19.28%.
- Full report
- ETFs: IYR, VNQ, WPS, VNQI, DRN, RWX, URE, SRS, ICF, RWR, SCHH, RWO, IFGL, DRV, KBWY, DRW, REK, FRI, GRI, FTY, FFR, RWXL, PSR, IFNA, FNIO, WREI
Jul. 9, 2014, 2:15 PM
- The iShares Global REIT ETF (REET) will comprise of real estate investment trusts across developed and emerging markets.
- The iShares Currency Hedged MSCI EMU ETF (HEZU) will offer investors exposure to the eurozone without the risk of currency fluctuations between the dollar and the euro by tracking the MSCI EMU 100% Hedged to USD Index and investing its assets in iShares MSCI EMU ETF (EZU).
- REET will feature an expense ratio of 0.14%, while HEZU will charge 0.51%; both funds will launch tomorrow, July 10th.
- Other global REIT ETFs: WPS, VNQI, RWX, RWO, IFGL, DRW, GRI, FFR, RWXL
- Other ETFs with exposure to Europe: VGK, FEZ, IEV, HEDJ, EPV, FEU, FEP, UPV, ADRU, FEEU, EURL, EURZ, DBEU, FIEU, IEUR
Jun. 23, 2014, 1:23 PM| Comment!
Feb. 28, 2014, 10:02 AM
- Falling from 18 basis points to 15, the annual expense ratio of Vanguard's FTSE Emerging Markets ETF (VWO +0.2%) now matches the cheapest-in-class, Schwab's Emerging Markets Equity ETF (SCHE +0.3%). BlackRock's recent entry as an ultra-cheap emerging markets fund, the iShares Core MSCI Emerging Markets ETF (IEMG +0.2%), for the moment continues with an expense ratio of 18 bps.
- Broad emerging market ETFs: EEM, VWO, EDC, EDZ, SCHE, IEMG, EEV, PIE, ADRE, EUM, EET, GMM, EEME, EMCR, DBEM, FEM, EWEM, EMLB, EMSA, EMFT, QEM, EMDR
- Other lower expense ratios from Vanguard: The FTSE All-World ex-U.S. Small Cap ETF (VSS +0.7%) down 20% to 20 bps, Global ex-U.S. Real Estate ETF (VNQI +0.3%) down 15.6% to 27 bps. Total International Stock ETF (VXUS +0.5%) down 12.5% to 14 bps, Total World Stock ETF (VT +0.5%) down 5.3% to 18 bps.
Dec. 19, 2013, 2:41 PM| Comment!
Nov. 15, 2013, 12:42 PM
- FlexShares, the ETF branch of Northern Trust Corp. (NTRS), recently released the FlexShares Global Quality Real Estate Index Fund (GQRE); the firm's first real estate focused ETF.
- This new fund, with an expense ratio of 0.45%, will provide investors with and REIT portfolio that provides exposure to the inflation-hedging qualities and long-term capital growth potential of global real estate.
- “Research shows that a high-quality, value-focused portfolio of real estate securities may offer attractive returns with less volatility compared to traditional capitalization-weighted global real estate indices,” said Shundrawn Thomas, head of Northern Trust's FlexShares ETF Group, in a press release.
- Other global real estate ETFs: WPS, VNQI, RWX, RWO, DRW, IFGL, GRI, FFR, RWXL
Nov. 6, 2013, 12:22 PM
- Rising interest rates have brought 4 years of easy gains for the REIT market to a halt and have advisers honing their bets. The board NAREIT All Equity REIT Index is up about 8% this year, not just paling in comparison the S&P 500's 24% gain, but REITs had been up 15% early in 2013 before rates started rising.
- On the idea of higher rates hitting relatively-highly levered REITs the most, Andrew Ahrens is looking for REITs with less relative debt on their books. On favorite is the iShares Retail Real Estate Capped ETF (RTL). He's also putting money into foreign-leaning funds such as Cohen & Steers' Global Realty Majors ETF (GRI).
- Cohen & Steers portfolio manager Chip McKinley suggests - unlike the U.S. - overseas REITs are only just now beginning to become popular. U.K. real estate companies are up more than 20% this year; Japan more than 40%. Up and comers include Germany and Australia. "Both markets are home to high-quality developers with attractive portfolios that are priced well-below the value of their underlying properties."
- Paul Curbo - co-manager of the actively-managed PowerShares Active U.S. Real Estate Fuind (PSR) - likes REITs with shorter-term leases as well as retail operators with more flexibility in setting lease rates.
- Global real estate ETFs: WPS, VNQI, RWX, RWO, IFAS, DRW, IFGL, GRI, FFR, IFEU, RWXL, IFNA.
- Broad U.S. real estate ETFs: IYR, VNQ, DRN, URE, SRS, RWR, ICF, SCHH, DRV, KBWY, REK, FRI, FTY, PSR, WREI.
Sep. 23, 2013, 9:03 AM
- Vanguard Global ex-U.S. Real Estate ETF (VNQI) announces quarterly distribution of $0.089.
- For shareholders of record Sep. 25; Payable Sep. 27; Ex-div date Sep. 23.
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