First State sees major value in discounted global property ITs

Global real estate investment trusts trading on huge discounts are offering value but liquidity remains low, said the managers of First State's Global Property Securities fund.

Andrew Nicholas, co-manager, said higher dividend income from Reits is driving the £31m fund to returns of 7%-10% per year. He added he is tapping into the larger Reits with better liquidity but is retaining a defensive focus and will not buy a trust with gearing higher than 60%. “Global real estate equity funds, while not immune to falls in capital values, provide their investors with a higher level of confidence of being able to get their capital back should they need it,” said Nicholas. “These funds aim to capture consistent medium to longer-term returns through maintaining a fo...