"A bonus for companies that offer green building" - April 2, 2011
lefigaro.fr / jdf.com – How is it more worthwhile to invest in listed property than directly into the stone?
Fred Tassin – This allows for better diversification as land generally have office buildings and shopping centers, while in the unlisted, the individual is generally limited to the residential sector. Another advantage is the liquidity of the market: if a problem occurs, the shares may be resold in the day, while a property may take several months to find buyers. Moreover, by their tax status, investment companies listed real estate are not subject to income taxation from the stone. Finally, management of the park is provided directly by the property, which is responsible for finding tenants, seek new property or to renegotiate the rent.
As for performance, they are relatively similar, the results of the land is mostly modeled on the evolution of asset values and rents. But these companies are listed, they are of course dependent on market shares, making them more volatile and therefore riskier.
Property values have performed well in 2010. Their context remains favorable?
The current context of renewed growth in the euro area and the beginning of inflationary pressure is favorable to real estate companies. With regard to the malls, with consumption rising and unemployment falling slightly, attendance will rise again. Who said traffic growth says rising sales shops, thus higher rents and therefore cash flows.And as in France, rents are indexed to 100% on inflation, the land naturally provide good protection against rising prices. For offices, better news are expected. With the crisis, all projects had been frozen. Restarting the demand for office should have a positive impact on rents.
The increase in lending rates does not she stop that rents and property prices?
We think not, unless the collapse of the euro area which would cause a surge in interest rates. In the future, we believe that the rents and thus the land revenue will increase moderately with the increase in the price index, while the debt of property values, average 70% fixed, will slightly impacted by higher interest rates.It should certainly not expect an exceptional year for stock markets as last year, but normalized to one year.
What do you feel about that?
Banks, faced with a more stringent banking regulation should no longer display the same frenetic lending in 2007 same day payday loans. This had led to the emergence of a bubble valuation on real estate. Getting a real estate project financing in the future will be reserved on the balance sheets of the highest order, and this one could wish the best for real estate which can only be penalized by as much volatility and speculation . This sector should no longer know the aberrations there three to four years. In 2007, the market capitalization of land values was greater than 40% of their heritage.A year later, after the financial crisis was the reverse scenario: they showed discounts of 50%.
Real estate remains there a long term investment or can you make some good short-term trading?
Unless you come across a nugget unrecognized undervalued by financial markets, it will become difficult to achieve significant capital gains in the short term. Real estate is and should remain a long-term investment. We are not looking for companies that merely collecting rent, but to land that have identifiable assets and whose project is to increase shareholder value through acquisitions.
This makes us wary of companies with more than half of the asset value is made up of debts.The major players in real estate (Unibail-Rodamco Gecina Icade Klépierre, Ed) but we are interested in smaller companies with industrial histories that follow the traditional route of a property value: cash flow growth and heritage value and recurring payment of dividend.
Building low-power label (BBC) is becoming more and more constructions as the renewal. Is this a choke point for property companies?
We believe that real estate companies that do not take into account this new situation will undergo discounts. We've seen a real appetite for green buildings, not for reasons of energy conservation long ago that the land seek to optimize the energy bill but because it will become a vital communication tool for these companies.Financial markets will give a bonus to companies that offer green building. Eventually, the rents will be noticeable differences between these and conventional buildings.
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