More than three hundred managers and professionals attended the sixth edition of the Iberian REIT & Listed Conference, which has already established itself as one of the most important meetings for the real estate sector in Spain and Portugal. Once again, Iberian Property joined forces with EPRA to organise this conference, which took place the 6th of February in the distinguished Rosewood Villa Magna hotel in Madrid, counting with the support of Aedas Homes, BNP Paribas Real Estate, Clifford Chance, Colonial, Lar España, Merlin Properties, and Morais Leitão.
The first presentation of the morning was given by Dominique Moerenhout, CEO of the European Public Real Estate Association (EPRA), who began by remarking that in 2024 we celebrate the 10th anniversary of the first listing operations in Spain, and that the SOCIMIs (Spanish REIT model) are a clear European example other countries should aspire to follow.
Making use of the old fashion way to quiz participants, more than half of the audience raised their hand to show they are more optimistic today that one year ago. On Dominique’s view we have reasons to be “cautiously optimistic”, because even though real estate investment volume decreased across Europe, listed real estate had an overall return of +17% during 2023, while the private real estate registered a -10% return. He recalled that «in 2022 the discrepancy was the other way around with listed accounting for a negative 37% return, and private a -4%».
The CEO of the EPRA, has also argued that valuations will be a key factor for the coming months, and he believes once the low economic growth is left behind, listed real estate will outperform the other assets classes.
Still on the economic context, Dominique highlighted that the listed sector is well prepared for high interest rates, and proof of that is 85% of the total debt in European listed companies is set at fixed rates, and around 38% of the debt issued by these property companies will mature between 2026 and 2028, therefore most companies should be able to roll-over bonds at lower interest cost than current levels.
One thing seems to be consensual for the future of the sector, certainty and cheap capital will be rare commodities, but opportunities are more evident than some might think. The current European share prices are a good example of it, with listed real estate companies trading with an average NAV (Net Asset Value) discount of 28%, a figure that is decreasing if we consider 6 months ago was at 45%, but which still demonstrates an important disconnect between share prices and operational performance.
«Diversification is essential for investors, but the inflation-hedge opportunity in real estate has never been clearer, and the earnings and rental growth figures of the listed sector make a compelling 'portfolio repositioning' opportunity for investors», Dominique Moerenhout concluded.
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