Steve Buller, portfolio manager with Fidelity Investments, joined REIT.com for a video interview during REITWeek 2014: NAREIT’s Investor Forum, held in New York. Buller manages the Fidelity Real Estate Investment Portfolio fund.
Buller was asked about the attractiveness about real estate investment opportunities in the United States versus international markets. Buller said he’s looking for the “superfecta” of characteristics in markets around the world: “good fundamentals, good access and cost of capital, excellent valuations and… technical factors,” such as positive capital flows.
“Unfortunately, right now, there’s not a country in the world where you have the superfecta,” Buller commented. As such, he said he’s looking to balance discounted valuations in markets where fundamentals might not be strong against higher-valued investments in markets where fundamentals are holding steady.
Buller said the conflict in Russia and the Ukraine hasn’t affected his allocations. In fact, geopolitical events are being ignored to a degree by the capital markets, according to Buller.
Looking more broadly, Buller said real estate securitization is in “expansion mode.” Whereas the growth primarily came from the United States in 2013, Buller noted that it is coming from Europe this year, which has seen a swell in both initial public offerings (IPOs) and secondary equity offerings.
“A lot of these IPOs are based on thematics: You can invest in Ireland, you can invest in Spain, there are some Dutch office companies,”Buller said. “So, new cash boxes are being generated to do this thematic investing.”