Five European REITs you need to know

Europe is home to 194 REITs, valued at a total of €210bn. Razak Musah Baba looks at five of the biggest

Europe’s developed markets commercial REIT market currently has 194 REITs in total and, according to EPRA, they have a combined market capitalisation of $210.5bn (€190bn).

Spain has 71, making it the largest by number of companies, with a total market capitalisation of $26.14bn. The UK, which joined the REIT regime in 2007, has 55 REITs with a total market capitalisation of $72.87bn, making it the biggest by size.

France with 30 REITs and Belgium with 17 REITs add $58.09bn and $18.59bn, respectively. The Netherlands, which first introduced its REIT regime in 1969, has five companies with a market capitalisation of $24.5bn.

European REITs, some managing multi-billion-euro property portfolios, cut across all the major property types of residential, office, retail and industrial, through to the niche sectors, such as hotels, data centre and student accommodation.

The likes of Vonovia, Unibail-Rodamco-Westfield, British Land, Klépierre, Segro and Gecina have not only provided investors with diverse exposure to property types across the continent but have also given investors access to a liquid market, unlike the private real estate market.

Unibail-Rodamco-Westfield
Euronext
Market cap: €17.2bn
Portfolio: €65bn

The enlarged group was formed in December 2017 following Paris-based Unibail-Rodamco’s acquisition of Australian firm Westfield Corporation. Unibail-Rodamco-Westfield owns and operates 92 shopping centres in Europe and the US.

Its EPRA net asset value (NAV) per share had decreased by 2.6% from the beginning of 2019 to the middle of the year. The decrease was due partly to the revaluation of property and intangible assets and capital gains on disposals, foreign exchange movements, the negative impact of the mark-to-market of debt and financial instruments, the company said.

Group net rental income on a like-for-like basis increased by 3.3% and net operating income was up by 2.2%. It also upgraded its 2019 adjusted recurring earnings per stapled share target.

Christophe Cuvillier, group CEO, said: “Unibail-Rodamco-Westfield delivered solid results, despite the challenging retail environment. With a unique transatlantic platform, connecting the best brands with over 1.2bn customer visits each year in the wealthiest catchment areas, the URW portfolio is at the forefront of the changes in a rapidly evolving retail environment.”

Trading activities this year so far include the refinancing of Westfield Stratford City for £750m and successfully pricing a €500m bond offering, “which shows the confidence of the credit market in URW’s balance sheet and performance”.

Cuvillier said the group’s €10bn pipeline is well-positioned for a mixed-use future, now with 50% of the gross leasable area in retail and the rest in dining & leisure, offices, residential, and hotels.

Cuvillier remains confident in Unibail-Rodamco’s performance, the outlook for the remainder of the year and favourable financing conditions.

Gecina
Euronext
Market cap: €10.7bn
Portfolio: €19.89bn

Close to 97% of the French REIT’s office portfolio is located in the Paris Region.

At its half-year results, the company raised its guidance for organic growth in office rental income in 2019 as it recorded a good performance during the first six months of the year.

Gecina’s EPRA NAV at 30 June was up 8% year on year, generating a total return of 11.4% over 12 months (and 6.8% over six months).

Trading activities during the first half of the year include entering into exclusive negotiations with a French institutional organisation for nearly 32,000sqm in Neuilly-surSeine and successfully placing a €500m bond issue.

The company has a €3.8bn project pipeline, with €3.0bn under way or to be launched shortly.

“This performance benefited from a slight compression of capitalisation rates for offices and a positive rent effect, as well as the impacts of Gecina’s total return strategy, through the sales completed and the growth in value achieved for the portfolio under development,” the company said during its results announcement.

Gecina said it is raising its guidance for recurrent net income per share growth for 2019, in line with the “solid performance recorded over the first half of the year, as well as the good levels of real estate markets in the most central sectors, and the continued favourable interest rate environment”.

the void at the oculus westfield

Westfield World Trade Center in New York

Vonovia
Frankfurt Stock Exchange
Market cap: €22.8bn
Portfolio: €47.4bn

The 2015 merger of German real estate companies Deutsche Annington and Gagfah created the country’s largest residential property company. Last year, Vonovia also succeeded in buying Austrian rival BUWOG for €5.2bn.

Vonovia said its first six months of the 2019 fiscal year were very successful for the group on the whole. Adjusted NAV per share during the first six months of 2019 rose 21.8% to €48.51 from €39.83 a year earlier. As at December last year, adjusted NAV per share was €44.90.

EPRA NAV per share during the period rose 7.4% to €50.23 from €46.79 the same period last year and €50.39 at the end of December last 2018.

All business segments showed positive development, the management board said during the results announcement.

The residential developer said that, given the dynamic development of the German, Austrian and Swedish housing markets, it expects to see a further increase in value in its investment properties and thus a moderate increase in adjusted NAV per share.

Vonovia said its first six months of the 2019 fiscal year were very successful for the group on the whole. Adjusted NAV per share during the first six months of 2019 rose 21.8% to €48.51 from €39.83 a year earlier. As at December last year, adjusted NAV per share was €44.90.

grecinas le cristallin building in paris

Gecina’s Le Cristallin building in Paris was leased to the Renault Group in 2016

EPRA NAV per share during the period rose 7.4% to €50.23 from €46.79 the same period last year and €50.39 at the end of December last 2018.

All business segments showed positive development, the management board said during the results announcement.

The residential developer said that, given the dynamic development of the German, Austrian and Swedish housing markets, it expects to see a further increase in value in its investment properties and thus a moderate increase in adjusted NAV per share.

Europe’s developed markets commercial REIT market currently has 194 REITs in total and, according to EPRA, they have a combined market capitalisation of $210.5bn (€190bn).

Spain has 71, making it the largest by number of companies, with a total market capitalisation of $26.14bn. The UK, which joined the REIT regime in 2007, has 55 REITs with a total market capitalisation of $72.87bn, making it the biggest by value.

France with 30 REITs and Belgium with 17 REITs add $58.09bn and $18.59bn, respectively. The Netherlands, which first introduced its REIT regime in 1969, has five companies with a market capitalisation of $24.5bn.

European REITs, some managing multi-billion-euro property portfolios, cut across all the major property types of residential, office, retail and industrial, through to the niche sectors, such as hotels, data centre and student accommodation.

The likes of Vonovia, Unibail-Rodamco-Westfield, British Land, Klépierre, Segro and Gecina have not only provided investors with diverse exposure to property types across the continent but have also given investors access to a liquid market, unlike the private real estate market.

Unibail-Rodamco-Westfield
Euronext
Market cap: €17.2bn
Portfolio: €65bn

The enlarged group was formed in December 2017 following Paris-based Unibail-Rodamco’s acquisition of Australian firm Westfield Corporation. Unibail-Rodamco-Westfield owns and operates 92 shopping centres in Europe and the US.

Its EPRA net asset value (NAV) per share had decreased by 2.6% from the beginning of 2019 to the middle of the year. The decrease was due partly to the revaluation of property and intangible assets and capital gains on disposals, foreign exchange movements, the negative impact of the mark-to-market of debt and financial instruments, the company said.

Group net rental income on a like-for-like basis increased by 3.3% and net operating income was up by 2.2%. It also upgraded its 2019 adjusted recurring earnings per stapled share target.

Christophe Cuvillier, group CEO, said: “Unibail-Rodamco-Westfield delivered solid results, despite the challenging retail environment. With a unique transatlantic platform, connecting the best brands with over 1.2bn customer visits each year in the wealthiest catchment areas, the URW portfolio is at the forefront of the changes in a rapidly evolving retail environment.”

Trading activities this year so far include the refinancing of Westfield Stratford City for £750m and successfully pricing a €500m bond offering, “which shows the confidence of the credit market in URW’s balance sheet and performance”.

Cuvillier said the group’s €10bn pipeline is well-positioned for a mixed-use future, now with 50% of the gross leasable area in retail and the rest in dining & leisure, offices, residential, and hotels.

Cuvillier remains confident in Unibail-Rodamco’s performance, the outlook for the remainder of the year and favourable financing conditions.

Gecina
Euronext
Market cap: €10.7bn
Portfolio: €19.89bn

Close to 97% of the French REIT’s office portfolio is located in the Paris Region.

At its half-year results, the company raised its guidance for organic growth in office rental income in 2019 as it recorded a good performance during the first six months of the year.

Gecina’s EPRA NAV at 30 June was up 8% year on year, generating a total return of 11.4% over 12 months (and 6.8% over six months).

Trading activities during the first half of the year include entering into exclusive negotiations with a French institutional organisation for nearly 32,000sqm in Neuilly-surSeine and successfully placing a €500m bond issue.

The company has a €3.8bn project pipeline, with €3.0bn under way or to be launched shortly.

“This performance benefited from a slight compression of capitalisation rates for offices and a positive rent effect, as well as the impacts of Gecina’s total return strategy, through the sales completed and the growth in value achieved for the portfolio under development,” the company said during its results announcement.

Gecina said it is raising its guidance for recurrent net income per share growth for 2019, in line with the “solid performance recorded over the first half of the year, as well as the good levels of real estate markets in the most central sectors, and the continued favourable interest rate environment”.

Vonovia
Frankfurt Stock Exchange
Market cap: €22.8bn
Portfolio: €47.4bn

The 2015 merger of German real estate companies Deutsche Annington and Gagfah created the country’s largest residential property company. Last year, Vonovia also succeeded in buying Austrian rival BUWOG for €5.2bn.

Vonovia said its first six months of the 2019 fiscal year were very successful for the group on the whole. Adjusted NAV per share during the first six months of 2019 rose 21.8% to €48.51 from €39.83 a year earlier. As at December last year, adjusted NAV per share was €44.90.

EPRA NAV per share during the period rose 7.4% to €50.23 from €46.79 the same period last year and €50.39 at the end of December last 2018.

All business segments showed positive development, the management board said during the results announcement.

The residential developer said that, given the dynamic development of the German, Austrian and Swedish housing markets, it expects to see a further increase in value in its investment properties and thus a moderate increase in adjusted NAV per share.

“We do not expect significant effects from the current discussion about the Berlin rent freeze,” it said. “Our current forecast is based on the outlook for the Vonovia Group as a whole, which includes the original overall plans for the 2019 fiscal year, as well as current business developments and possible opportunities and risks.”

Segro 
London Stock Exchange
Market cap: €8.83bn
Portfolio: €10.86bn

Formerly known as Slough Estates, Segro converted to a REIT in 2007 when the regime was introduced in the UK.

SEGRO CEO David Sleath said the company has had another period of strong performance during the first half of the year, with good earnings momentum driven by rental growth, active asset management and a record level of developments.

“Our portfolio of high-quality and well-located warehouse assets is performing well, as evidenced by strong rental growth and the low vacancy rate,” he said. “Our development programme continues apace, capitalising on the ongoing, positive occupier demand across our markets.”

Its EPRA NAV per share increased 4% during the first six months of the year to £6.73 from £6.50 six months earlier, driven by a 3.5% increase in the value of the portfolio. This was due to development and asset management gains as well as estimated rental value growth across both the UK and continental European portfolios, the company said.

During the period, the company raised £451m via equity placing, re-financed its debt and issued a €500m bond to help position itself “for further development-led growth”.

“As anticipated, the structural trends of e-commerce and urbanisation that have been driving performance in our UK business for some time are now increasingly evident in our continental European markets,” Sleath said.

student housing for london metropolitan university is owned by unite

Student housing for London Metropolitan University is owned by Unite

He said he expected the development programme to generate further significant and profitable new rental income over coming years. “This addition to the top-line, combined with the compounding effect of rental growth through our asset management of the existing portfolio, should enable us to drive both sustainable earnings and further dividend growth.”

Unite Group
London Stock Exchange
Market cap: €3.3bn
Portfolio: €3.38bn

Unite Group has agreed to buy Liberty Living, a student housing platform owned by Canada Pension Plan Investment Board (CPPIB) for £1.4bn. CPPIB will retain a 20% stake in the combined group once the deal is completed later this year.

The proposed acquisition will create a portfolio with a gross asset value of £7bn, comprising approximately 75,000 beds across the UK.

Richard Smith, CEO of Unite Students, said the first half of 2019 has been a transformative period for Unite. The firm’s EPRA NAV per share during the period was 4% to £8.20 from £7.90 six months earlier. 

“Our growth remains underpinned by our high-quality portfolio in the best locations, deep and long-standing relationships with universities, our operating platform and positive market dynamics,” Smith said. “We maintain our positive outlook for the business with a record 92% of beds already reserved for the 2019/20 academic year. As such, we remain confident in a rental growth outlook of 3-3.5% for 2019-20 and 2020-21.”

european reit market

 

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