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Listed and Private Real Estate : Putting the pieces back together

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Listed and Private Real Estate : Putting the pieces back together

A property owned by a listed real estate company, such as a Real Estate Investment Trust (REIT) or a real estate management and development company, should produce returns close to those of an equivalent asset that is privately owned. In reality, however, the results differ, especially when looking at short-term performance. The challenge for real estate investors is to be able to use both listed and direct real estate in their real estate allocations and understand the drivers of performance for each. Specifically, how do equity market factors, financial structures and individual properties contribute to performance?

Previous studies generally relied on using standard headline index series, which permitted only imprecise analysis due to their varying constituents. This study similarly uses closely corresponding market index series, but also compares precisely matched samples from 19 European listed real estate companies with long term returns at the asset level. This detailed dataset enables us to make an apples-to-apples comparison within and across asset, vehicle and security levels, using custom indexes or composites.

Source : MSCI

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