Investing in listed real estate
Listed real estate companies offer investors many benefits in a blended equity portfolio and as part of a real estate allocation. Benefits include:
Strong long term performance
The annualised total returns of listed real estate companies within the FTSE EPRA/NAREIT Developed Global and Developed Europe Index Series have outperformed global general equities and global government bonds in most of the last 20 years.
Attractive dividend yield
Listed real estate companies have provided a stable income stream to investors. The 5-year average yield of listed real estate companies within the FTSE EPRA/NAREIT Developed Europe REITs Index is 4.9% (as at September 30, 2016).
Listed real estate companies can be readily bought and sold unlike other forms of real estate ownership.
Governance & Transparency
Listed real estate companies operate under the same rules as other public companies for securities regulatory and financial reporting purposes.
EPRA recommends the use of EPRA Best Practices Recommendations (BPR) which provide further reporting guidance over and above public company reporting.
Equity diversification. Over the long term, listed real estate company returns have shown little correlation to the returns of the broader stock market.
Geographic diversification. Listed real estate companies enable an efficient allocation of capital by geography, making use of the regional expertise of the property professionals at the listed real estate companies.
Sector diversification. Listed real estate companies enable an efficient capital allocation by real estate sector, varying from the traditional sectors to new and relevant niche sectors.
However, it is worth noting that over the medium to long term listed real estate company returns perform in a similar way to other forms of real estate investment, but with the benefit of being highly liquid.