Going Global With REITs
What about Asia?
In Hong Kong, we recently had the largest REIT [initial public offering] ever in the world. The government wanted to get out of the business of owning and operating shopping structures. It sold for $10 a share but was worth about $16 a share. With governments, getting the best price is not the top priority, which makes it a huge investment opportunity. They dumped those very valuable assets on the public market. That's one reason why real-estate securities have been doing well.
What can we expect going forward?
There is now a global economic recovery. When an economy does well, real estate does well. Rents and occupancy rise, and the real estate is worth more. Regulatory change is really putting in place these REIT-like structures, which is a much more tax-efficient way to own real-estate investments in the first place. Now is the best opportunity to invest in REITs, but the sentiment is negative. That makes this the best entry point for real-estate stocks in the past three years. They are cheap, and literally every market is trading at a discount.
How can investors get started?
Markets we think are most cheap are the U.K., Hong Kong, and the U.S. Because this is a very esoteric part of the market, I would definitely recommend a fund. This stuff is squarely in the "don't try this at home" category. If you want to own a portfolio, a great way to do that is through a fund.
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