Globe editors have posted this research report with permission of Timbercreek Asset Management. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:
Our fundamental approach and valuation models suggest global REITs are priced to deliver an 8.5 – 10.5 per cent total return in 2017, consisting of a 4 per cent current dividend yield and 5 – 6 per cent growth in earnings driven by occupancy gains, higher revenue from bringing in-place rents on expiring leases to market, acquisition of new properties and the completion of existing development projects. All in all, we believe global real estate demand trends are firm, and valuations are attractive, with global REITs trading at a 6 per cent discount to NAV.
We believe the 8.8 per cent decline in global REIT share prices since August 1, 2016 has created an attractive buying opportunity for investors. As we canvass our key fundamental indicators, we believe global real estate is well positioned to benefit from another year of growing demand, modest supply and positive economic growth. Demand growth is being led by the U.S. and Australia;supply is expected to remain favourable on the continent, and valuations are most attractive in Hong Kong, Europe, Australia and the U.S.
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