10/02/2012
By Matt Ritchie
The attractiveness of European real estate investment trusts (REIT) to pension funds has rarely been higher given the current market conditions, according to the European Public Real Estate Association (EPRA).
Recent research from the association showed that between 2007 and 2011 European REITs generated an average dividend of 5.1 per cent, compared with general equities at 4.1 per cent, government bonds at 3.3 per cent, and average annual inflation in the eurozone of 2 per cent.
The statistics show that REITS suffered less than other asset classes during the lows of the financial crisis. In the period 2009 to 2010 the dividend yield paid out by listed real estate companies bottomed out at -19.5 per cent, whereas REITs hit a floor at -11.8 per cent and general equities showed a maximum decline of -24.6 per cent.
EPRA director of research Fraser Hughes said: “At a time when pension funds are struggling to cover their liabilities due to low interest rates and all investors are seeing weak returns from investment markets, the attractiveness of the dividend yield on European property stocks in general, and REITs in particular, has rarely been higher.”
