REIT growth should stagnate on the mid-term

REIT growth should stagnate on the mid-term

The «strong» influence of economic cycles on the occupancy contracts’ values can affect not only the gross annual income of these societies, but it can also «harm the assets’ annual valuation, lowering the Gross Asset Value and dragging down all the remaining indicators», it can be read in the report "Assets Under Management Observatory – July 2020" compiled by Axis Corporate.  This is especially true during the pandemic, since one of the impacts Covid-19 has had on REITs is rent adjustments and the implementation of moratoriums.

Nevertheless, the latest market movements show that new REITs should appear on the market: between 20 and 25. Of these, half should prefer to be listed at Euronext instead of the Mercado Altenativo Bursátil pointed out the report, which explained that «the former is more flexible concerning certain relevant requirements such as the demand within the Spanish market to have a liquidity provider, distribution amongst minority shareholders or an assessment review».

For the partner for Financial Services and Real Estate at Axis Corporate, José Masip, «all that was mentioned above reinforces the need to have a consolidation within the sector. In the same way, a higher focus is also predicted, with REITs focusing their portfolios on less types of assets in order to maximise their efficiency thanks to the specialised knowledge and to keep adding to its gains».

There are currently a total of 86 REITs in the Spanish market, which, in only one year, grew the volume of assets under management up to 50 billion euro. Merlin Properties and Inmobiliaria Colonial remain on the podium representing more than 45% of the whole. Their different tax benefits also multiplied by 4 their market capitalisation by 4, reaching 23.5 million euro. Currently they represent around 2% of the country’s GDP.

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