REAL ESTATE - Thirty UK property companies, nine fund managers and the London Stock Exchange have joined a campaign to educate financial advisers and brokers about quoted property investment, including REITs.
The British Property Federation and the Investment Property Forum are backing the Reita campaign chaired by Henderson head of property equities Patrick Sumner.
Each of the members – which the BPF started recruiting in May – has contributed £20,000 to a campaign budget of £600,000. The mandatory contribution for new joiners “deters companies that aren’t serious,” said REITA project coordinator David Butler. “The programme is valuable because of the brands associated with it – and because it’s credible and non-partisan.”
However, he added the group was “open to any credible company that wants to join us”.
Goldman Sachs, Merrill Lynch and Morgan Stanley are among the financial institutions that have already joined up. Fund managers involved in the campaign include Henderson, AXA and SWIP.
The campaign comes out of a mammoth industry lobbying effort ahead of the introduction of REITs. “Now the legislation is through, the question is how we get private investors to enter a market that has been dominated by institutional investors,” said Butler.
Meanwhile, Standard Life has denied that REIT-hungry investors risk swapping an illiquid asset class for equities volatility.
Andrew Jackson, head of segregated property funds at Standard Life, told IPE Real Estate: “Yes, REITs are subject to the short-term volatility of equity markets but you have to remember that in the medium term – say, over a two—three-year horizon – REITs behave more like the underlying property markets.”
Describing investor appetite for REITs as “a global phenomenon”, he said: “It reflects the attraction of commercial property, but with investor concern about the illiquidity of real estate as an asset class.”
He spoke as the firm announced that it had been selected by Korea’s CJ Asset Management to run a new fund, the won (currency)-denominated CJ Standard Life Investments Global Property Fund, which will be marketed to Korean institutional and retail investors.