Green Street Says European Private Market Real Estate Returns Outpacing Local Bond Rates

Cedrik Lachance, director of REIT research at Green Street Advisors, participated in a video interview at Nareit’s REITweek: 2018 Investor Conference in New York.

Lachance pointed out that returns from European private market real estate, compared to local bonds, are “far more attractive” than in the United States. “We see about the same relationship in the public market, as the net asset value (NAV) discounts in Europe and the U.S. are about the same,” he added.

Green Street’s favorite sector in Europe is self-storage, Lachance said. He noted that the sector is still institutionalizing, so the rate of return is “very attractive.” Green Street is also positive on Swedish property companies, primarily in the office sector, and UK specialist property companies.

In the U.S., Lachance said Green Street favors the residential sector, where manufactured homes and apartment assets are “very attractively priced.”

Meanwhile, Lachance said the biggest near-term disruptor remains e-commerce, which will continue to be an impediment to retail. On the other hand, “the runway for additional performance on the industrial side is going to be pretty significant,” he noted.