North American REITs trading above net asset values

REITs are causing quite a stir in the markets these days.
North American-based REITs are trading at a three per cent premium above net asset value (NAV) while U.K. REITs go for an 18 per cent discount to NAV. These were just some of the findings gleaned from the RealREIT conference held recently in Toronto, says Avison Young commercial real estate broker Sam Fogell .
Conference goers also heard the REIT market’s bottom point was a 45 per cent discount to NAV in all markets simultaneously, which was unusual because they usually flucturate, notes Fogell. North American REITs have since increased 95 per cent from their bottom prices, European REITs are trading 80 per cent higher, and Asia-Pacific region REITS are up 80 per cent.
Meanwhile, says Fogell, there was considerable discussion around proposed upcoming accounting rule changes. In the next year or so, Canadian and U.S. REITS may be required to employ International Financial Reporting Systems (IFRS) for their financial reports after using Generally Accepted Accounting Principals (GAAP) for decades.
IFRS are common in Europe. The change may reduce REIT portfolio values, because totals will be based on each property’s market value rather than its actual purchase price.
In recent months, REITs have raised $30 billion worth of new equity. It was previously believed the money was intended for the purpose of distressed properties. However, conference goers suspect REITs could use the money to pay down debt instead, say Fogell.

To contact Fogell, click on the link below.

http://www.avisonyoung.com/Our_Professionals/Vancouver/Bio/Fogell~Samuel/