Return of REITs in 2010: ING Clarion
ING Clarion is optimistic about the state of real estate investment trusts (REITs) in 2010, predicting solid growth and a total return from global REITs of between 5 per cent and 15 per cent.
Improved capital markets and economic conditions would support the rising REIT market after bottoming out in mid 2009, according to ING Clarion director and portfolio manager Chris Reich.
“Capital raisings in 2009 were largely about balance sheet repair, but a number of companies raised in excess of what was needed to position them for future growth. We believe acquisition opportunities for sensibly geared companies will emerge in 2010,” Reich said.
“In the last nine months credit markets have improved more quickly than we expected, so there hasn’t been the level of distressed selling that we had anticipated. However, private owners of real estate continue to have fewer avenues to source capital as compared to REITs, and this could lead to some interesting acquisition opportunities for the REITs,” he added.
For companies that adopted a conservative payout policy during the financial crisis, dividend growth could exceed earnings growth in 2010 as these policies are normalised, according to ING Clarion.
“REITs’ earnings growth should benefit from the economic recovery and REIT management teams could drive earnings further in the coming years as they take advantage of accretive acquisition opportunities,” Reich said.
AUTHOR
Mike Taylor
Recommended for you
Janus Henderson is actively seeking to partner with private wealth firms in Australia as it looks to expand its number of strategic partnerships, as well as focus on retirement income product development.
Global investment manager First Sentier Investors has launched an umbrella brand to provide greater clarity around its shift to a multi-affiliate asset manager encompassing six investment teams.
Janus Henderson has seen intermediary outflows in the second quarter of US$1.2 billion, although its deal with insurer Guardian means overall net flows are US$46.7 billion.
Infrastructure assets are well-positioned to hedge against global uncertainty and can enhance the diversification of traditional portfolios with their evergreen characteristics, an investment chief believes.
