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【出版时间及名称】：2010年3月英国地产行业研究报告
【作者】：EVOLUTION 证券
【文件格式】：pdf
【页数】：36
【目录或简介】：
REITs’ dividend yields are above the FTSE average, but investors fear
NAV reversals — Unrealised gains are transitory: they can vanish as fast as
they appear and are substantially beyond management’s control. Dividend
yields still do not adequately compensate investors for the risk of resumed real
estate value declines.
► REIT management needs to rebuild credibility with investors — The
REIT sector is too small to be a “must have” in an equity portfolio. In early
2009, the unanticipated collapse in property values forced the major REITs to
act to protect their lenders at the expense of their shareholders. Deeply
discounted rights issues wiped out shareholder value, while disposals at
distressed prices diluted earnings.
► Did the REITs’ business model break? — We assess whether the major
REITs needed the additional equity and to what extent the rights issues were a
failure of company strategy. Hammerson and Liberty needed equity to protect
covenants; British Land did not. Land Securities and SEGRO could have
squeaked through.
► Have managements learned from recent experience? — REITs took on
too much debt with covenants linked to property values, the latter of which
were entirely out of their control. Management blamed the rescue rights issues
on the unprecedented decline in real estate values, with no acknowledgement
of REITs’ strategic flaws. As a result, little has been done to address the
problems which got the REITs into trouble.
► Which companies deserve to be trusted? — We have attempted to remove
the “noise” from unrealised revaluations to create a history of managementdriven
total returns on capital at cost for some of the major REITs. These
should be at the core of an investor’s decision to invest, not simply the
prospects for NAV which are substantially outside management’s control.
► Great Portland Estates shines through; British Land seems safest —
Great Portland Estates’ strategy has proven to be resilient before and after the
rights issue, selling at the top, investing at the bottom. Significant shareholder
value has been created by recycling assets, on top of decent operating
returns. British Land’s operating returns are strong and stable historically, its
financial structure is solid and its yield is 13th highest in the FTSE 100.
► The others are uncompelling — Until REITs can convince investors that they
have resolved the strategic flaws which almost felled them, and that they can
be reliable custodians, crystallisers and distributors of shareholder value, the
UK REIT sector is likely to remain one more suited to trading than to
investment.
Investment Thesis
In 4Q08 the IPD monthly index fell 15%: 4% in October and 6% in each of
November and December. The speed was unprecedented and the major UK REITs
found themselves with too much debt and covenant limits fast approaching. Both
were a result of management action, or inaction.
On the other side, they faced property values in free-fall, dictated not by transaction
values, but by valuers trying to keep up with the withdrawal of credit, and a collapse
in market confidence. Both were outside their control.
They had two options: sell assets, but it was too late, or raise equity.
In the event, the five major REITs raised £3.7bn at an average discount of 72% to
historic NAV (81% excluding Liberty’s first placing and open offer). Even Great
Portland Estates and Shaftesbury, for which the rights issues were opportunistic,
raised at 59% and 55% discounts to prevailing NAV. These dilutive rights issues
erased years of shareholder value.
The UK REIT shares collapsed in the period from end-June 2008 to the market’s
nadir on 9 March, falling 63%, before rising by 95% to current levels, half of which
was achieved within two months of the bottom.
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