Speaking to InvestorDaily, Zenith Investment Partners analyst Jonathan Baird said that relative to other sectors the level of turnover within REITs is “quite high”.
“It’s a little unusual and a dynamic that comes from a growing sector, with many parts of Europe and Asia only recently gaining traction in the REIT space,” said Mr Baird.
Commenting in the Zenith 2014 Property Sector Report, Mr Baird said the expansion of fund managers into Asia has contributed to the trend.
“We saw the domino effect of some significant funds management firms coming into Asia and looking to build out teams there,” he said.
“We’re seeing it in Europe as well. And given the pool is only of limited size to get experienced candidates, they generally come out of rated peers,” said Mr Baird.
The comments come after a number of senior departures from AMP Capital’s property securities team in April, which sparked ratings concerns.
“Investment staff turnover has plagued the property sector in recent years,” he said.
“Given there are a number of positions available, I anticipate this cycle is going to continue for some time,” said Mr Baird.
One other takeout of the Zenith report was that REITs are slowly but surely becoming less conservative in their behaviour.
“While short term in nature, Zenith has noticed a slight reversal in this trend with a modest increase in the debt to equity ratio of the index and an increase in non-core activities such as funds management,” said the report.
“While many fund managers were quick to highlight that we are currently a long way off pre-GFC behaviour, Zenith is of the opinion investors are still regaining trust in the sector and we believe it is critical that fund managers maintain a healthy level of pressure on Australian REITs to ensure prudent behaviour,” it said.
