Listed property investors are finally seeing greater returns on the back of a recovering market, according to Aviva Investors.
Aviva Investors investment manager Brett McNeill said the group had seen strong signs that the listed property sector was recovering, which was largely being driven by a return to conservative gearing, good management, and ownership of high quality properties.
“The role of listed property as a defensive asset class offering reliable returns and high liquidity, even during the tough times, is one that was forgotten when many listed property trusts, also known as REITs (real estate investment trusts), took their eye off the ball in the chase for frankly unrealistic and certainly unsustainable returns,” McNeill said.
“Such strategies included the use of excessive gearing, unsuccessful forays into overseas property markets and corporate structures that failed to focus on shareholder value.”
According to McNeill, many REITs have learned their lesson, cleaned up their portfolios and strategies, and refocused on the basics.
“There’s an increasing number of REITs now able to offer investors what they should always have had from their listed property investment – that is, exposure to high quality, diversified real estate portfolios that deliver an attractive, sustainable and growing income stream,” he said.
“These options may not be glamorous but they are solid, effective and reliable.”
McNeill said investor interest in the sector had definitely increased and that Aviva Investors was meeting and briefing an increasing number of advisers as listed property enabled them to offer clients a relatively low risk investment with the income returns they wanted.
“Even advisers who have been burnt in the past are now revisiting the sector and looking for a managed fund that has a simple structure, full liquidity and offers exposure to a diversified portfolio of good quality REITs,” McNeill said.
