The European real estate equities sector is well positioned for a strong expansion over the next few years via acquisitions and IPOs. The resilience of the listed REIT model, in terms of access to capital, has proved to be more robust than non-listed property funds in the credit crisis, leading brokers Kempen & Co. concluded in a research paper presented to journalists at the European Public Real Estate Association's (EPRA) annual conference.
The EPRA annual conference which gathers together top industry executives, investors, analysts and bankers, from across Europe and beyond, is being held in Amsterdam for association members between September 2 -3.
Kempen said listed real estate firms are expected to further increase their growing dominance of the European retail property sector on the back of attractive valuations and at the expense of non-listed funds, many of which are struggling to obtain refinancing.
Dutch Corio ranks as the most active recent buyer with over 1.7 billion of acquisitions carried out over the last 12 months including the 1.3 billion Multi portfolio (mainly in Germany) and the 50/50 joint venture acquisition of the largest shopping center in Italy (Porta di Roma). In France, nine of the 10 largest shopping centers, in terms of turnover, are now all owned by listed companies including Unibail-Rodamco (6), Klépierre (2) and Hammerson (1).
Real estate companies are also looking to lock in current low interest rates and are using the bond markets as a new source of financing in order to obtain seven to 10 year maturities (banks currently only offer three to five years as a maximum). The loan books of UK large caps such as British Land, Hammerson, Land Securities and SEGRO are mainly comprised of long-term debentures. Although continental European listed real estate bond markets are still in their infancy, French Unibail-Rodamco and Klépierre have proved to be successful issuers of debt in the last 18 months and Corio recently issued 250 million in 10-year bonds.
Although recent initial public offerings (IPOs) in Europe have been mainly related to opportunistic real estate vehicles seeking to benefit from distressed sales in the UK, or have been in Turkey in response to a cut in the free float hurdle for new listings, Kempen sees Germany as a future maj