Is the right time to investing in commercial property trusts or Reits?
There’s a slightly different mood – largely one of cautious optimism - regarding commercial property investment trusts as well as certain Reits or real estate investment trusts, which recently celebrated their first anniversary. Several real estate market experts, commentators and analysts have pointed to the immense potential that trusts like Foreign and Colonial Property Trust harbor. It’s on a significant discount, yet its portfolio comprises noteworthy top-quality property located in central London. Even if the discount doesn’t narrow in the near short term, you’re still getting a yield of close to 6% while you wait.
Managing director of F&C (Property Asset Management) Paul Herrington has conceded that the market is ‘pretty horrible’, to put it in his own words, and that there’s sure a ‘bumpy road ahead’. However, he also reckons that the discount wouldn’t widen further very significantly. “I would be buying myself, he has been quoted as saying, if I carried any (spare) cash to put in it. It may seem like catching a falling knife, as they say, at the moment but then the best bargains are invariably to be found when hardly any one else is interested. Experts though caution against investing in trusts that carry rather high levels of ‘gearing’ - borrowing - or the ones, which are heavily invested in secondary assets.