Strong Outlook for European REITs - Barron's

| About: SPDR Dow (RWX)
This article is now exclusive for PRO subscribers.

Excerpt from Barron's Weekly Magazine. Receive all our excerpts by signing up here:

New Concept for the Old World by Arindam Nag

Summary: U.S. REITs have attracted billions of dollars while outperforming the S&P for seven years. But U.S. REITs are increasingly merging, offering fewer investor opportunities. Europe's REITs offer a new alternative to U.S. investors as European economic cycles are decoupled from the U.S., and aren't slumping. England, Holland, France, Italy and Germany are all joining the fray: Shares of top FTSE properties companies like British Land, Hammerson and Land Securities rose over 25% since mid-2006 on REIT conversion speculation. FTSE REITs offer 2.4% yields vs. 2.9% in the U.S, and they don't trade at premiums like those in the U.S. Large cap REITs offer value, but their diversity costs them a "conglomerate discount." Better value comes from specialty sector REITs like Brixton, invested in land around London's Heathrow airport. France's Unibail shares rose 300% between 2003-2005, when all 10 top REITs' values went from €11 to €18 billion. German REITs are promising as 75% of German conglomerates own the commercial properties they occupy. Deutsche Telekom (DT), for example, owns €8b worth of investable property. Fidelity International Real Estate Fund manager Steven Buller says the divide between cap gains and rental yields will go from 50-50 (now) to 30-70, as more companies transform themselves to REITs and pay out higher dividends.

Related Links: One way for U.S. investors to play the international REIT market is with the SPDR DJ Wilshire International Real Estate ETF (NYSEARCA:RWX) • Institutional Investors Dumping REITs as Equity Office Deal Pressures YieldsInvesting in Indian Real EstateDJ Wilshire US and International REIT ETFs Not Directly Comparable

DJ Wilshire International Real Estate ETF 18 02 2007