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REIT Allocations Gaining Steam in Europe

11/29/2012 | By Matthew Bechard

Philip Charls, CEO of the European Public Real Estate Association (EPRA) joined REIT.com for a video interview at REITWorld 2012: NAREIT's Annual Convention for All Things REIT at the Manchester Grand Hyatt in San Diego.

EPRA, founded in 1999, offers a voice for the European listed real estate industry. The association's objectives include encouraging greater investment in listed real estate in Europe.

Charls discussed pension funds and REIT allocations in Europe. He said EPRA conducted a survey over the summer asking institutional investors and pension funds how they view REITs, and 60 percent said they view them as real estate. This is an increase from 40 percent who viewed REITs as real estate when the last survey was conducted five years ago.

"We see a big difference in Europe," he said. "We have players like APG, one of the biggest players in the world, and have about $25 billion exposure to real estate, 50 percent direct and 50 percent listed."

Despite the ongoing financial crisis in the region, Charls said there are opportunities for listed real estate in countries such as Germany, Italy and Spain. He said that while Germany has issues with open-ended funds, it creates a "fantastic window of opportunity for us. He added that it's important to communicate to the government the importance of having an alternative investment vehicle.

He said Italy and Spain are completely different, but the risk is minimal and there are opportunities in those countries.

"The Italian government has announced that they will offload assets," Charls said. "We have been talking to the government and we've been asked our advice on what should listed vehicles look like."

Charls compared Spain now to the United States' savings and loan situation in the 1990s. He said a lot of the real estate is being held on banks' books.

"Something needs to happen. The timeline is definitely longer before it starts moving, probably 18 to 24 months, but there is opportunity there as well," he said.

When it comes to the role of EPRA, Charls said in the past the association would solely focus on explaining the financial aspects of the industry. Now, the focus is broader.

"On the listed side, we specifically explain how we contribute to city refurbishment, what we do in a sustainable-build environment and we talk about financials," he said.