Property firms urged to focus on active management

Both REITs and listed property firms will have to create value by focusing on active asset management if they are to close the widening gap between share prices and net asset values, a conference at the MIPIM trade fair was told yesterday.

Matthew Cutts, head of lenders and investors at the UK’s EC Harris, pointed out that listed property firms in the UK, France and Hong Kong are currently reporting average yields way below the typical yield of a 10-year government bond.

He said the sector was facing a number of challenges, such as rising construction costs, a higher debt costs, increasing competition for tenants and a limited talent pool for a growing sector. But companies like Gecina and MSREF are showing what can be achieved with aggressive and focused asset management, he said.

‘We have to work harder to deliver value - certainly more value than a safe government bond - or we’re all in trouble,’ he said. This will mean both aligning to tenants needs and pro-active asset management, continuously reassessing the portfolio mix for higher returns, he said.