The global listed property market has fallen further than expected in nearly every region in the current market turmoil, even after taking into account declining earnings and rising capitalisation, according to ING Clarion Real Estate Securities’ valuation models.
The fall has led to global real estate investment trusts (REITs) trading at a 20 per cent discount to net asset value, according to the report.
The director and portfolio manager of ING Clarion, Chris Reich, said despite REITs recapitalising from high dividend yields and offshore expansion, some companies in the sector will find it necessary to find additional equity due to declining asset values and a declining currency.
REITs have raised more than $8 billion from equity placements and rights offerings.
The downturn in property values will lead to stronger REITs capitalising on market opportunities.
Reich said despite the deterioration in fundamentals in the market, REITs’ cash flows were supported by long-term lease structures.
