EUROPE - The total return of Italian pooled property funds dropped during the first half of 2008 but still managed stay in positive territory of 4.1%, according to the latest results from IPD's Italian Pooled Property Fund study.
IPD, the UK-based provider of commercial real estate performance data, monitored a total of 16 blind pool funds and 15 seeded funds for its Italian PPFI and found the 12-month total return figure for Italian PPFI fell from 9.5% in December 2007 to 4.1% in June 2008.
Although the market has dropped in value, it did still deliver a return, in comparison to property equities which showed a weak performance of -32.6% in returns, and against negative returns of -19.8% for Italian equities and -1/6% in bonds.
"These results show that the Italian property funds industry has not been left untouched by the impact of the global financial crisis, although all sub-indices are showing positive returns and only the Blind Pooled Property Fund Index reported null performance for the last six months," said Davide Manstretta, head of the fund level analysis at IPD.
The biggest allocation within property from all funds was in the office sector which amounted to 55.5% of holdings, followed by a 16.3% retail allocation, along with 10.6% to industrial and 5.8% of assets which were allocated by Italian funds to overseas property.
Seeded funds continued to outperform blind pool funds in the last six months - delivering 2.5% and 0% respectively - and now appear stronger in general according the IPD, generating returns of 7.1% vs 1.2% over 12 months and the 10.9% vs 6.4% over three year, though this may be because seeded funds are often sector specialists rather than balanced funds.
The seeded funds' net asset value to June 2008 stood at €4.86bn in comparison with the blind pool funds' net asset value of €3.75bn.
The best performing seeded fund was Spazio Industriale, with a gross yield of 16.5%, while the strongest blind pool fund was Immobilium, with a gross yield of 8.9%.
Manstretta believes the IPD Index is an important contribution to the transparency of the market.
Assogestioni, the Italian Association of fund and asset managers, and the IPD Italian Consultant Committee both provided support in the development of the research.