GLOBAL - "In contrast to the direct property market it is our strong view that real estate stocks have made their lows for this cycle and that the REIT bear market ended in March this year," said Cohen and Steers co-chair and co-CEO Robert Steers. 

At a press conference to mark the beginning of EPRA's annual conference in Brussels last week, and referring to a new research paper from Cohen and Steers, he noted that the rally coincided with the first of three phases.

"The first is the recapitalisation process. Since March US$45bn (€32bn) has been raised by REITs around the world. In the environment we're in today… the ability to raise substantial amounts of debt and equity capital… is extraordinary. One of the reasons REITs successfully passed this very significant stress test is the discipline the public market imposes to have leverage levels that are lower than those of the traditional private real estate investor. We don't think we're even half way through the equity recapitalisation process."

The paper states that in the second phase, preceding the final fundamental recovery in markets there will be significant acquisition opportunities in the US, Spain, Germany and France and to a lesser extent in Asia.

REITs will "pick up the pieces," Steers said, adding: "For some time the property cycle around the world will remain an acquisition opportunity; for those able to access capital in the middle of a liquidity crisis this represents an unprecedented opportunity.

"We believe that REITs are in a prime position to source acquisitions and tap almost unlimited amounts of capital. REITs will be raising in excess of US$100bn annually for the foreseeable future. With traditional property investors by necessity largely on the sidelines, REITs are in prime position and will have first mover advantage."

In the last phase Steers believes that equilibrium will return to the property market around 2011. "It takes time for economic and property cycles to play out so the specific timing will depend on regions and property level economics and type," he said.  

UK property recapitalisation accounted for GBP4.3bn (€4.9bn) of the US$45bn total.

At the conference EPRA presented its new chair, Unibail Rodamco CEO Guillaume Poitrinal, who succeeds Serge Fautré. Poitrinal said the watchwords of the new investment era would be diversification, caution and professionalism.

He stressed the "substantial fiscal resources" that REITs generate for governments, which thanks to the withholding tax on dividends persist even through a downturn. "The industry needs to make this point to government," he said.

Poitrinal also said that "there will be a move to regulate more and more, so we as an industry need to be united. We also need to lobby governments to extend REIT regimes and the mutual recognition of REIT regimes throughout Europe."