A Comparison of US & Asian REITs
Posted on Monday, October 1st, 2007 | In Foreign MarketsU.S. REITs are still too expensive as guaged by the spread between their yields and the yields on 10-yr U.S. Treasury Bonds.
Asian REITs are more reasonably priced in terms of that measure — perhaps more appopriately representing the risk differences between a real estate and intermediate term government bonds in the home country.
The table below shows the average REIT yield in several Asian countries as of mid-year 2007, as well as the spread between REIT yields and home country 10-year government bonds. In each country the average spread is positive — REITs yield more than government bonds.
click image to enlarge
The Asian REIT yield spread was similar a year ago, as shown in this graphic representing mid-year 2006:
click image to enlarge
U.S. REITs, on the other hand, present a different picture as represented by the two largest market-cap REITs in each of the four key equity REIT types. In each case the current yield spread between REITs and 10-yr Treasuries is negative.
click image to enlarge
One could say that the U.S. is different, but we don’t think so. Last time we checked, the law of gravity worked pretty much the same all over the world.
There are other factors to consider when investing in REITs, but the relationship of REIT yields to government bonds should be an important element in your decisions.
Last 5 posts by Richard Shaw
- Are negative yield money funds next? - November 19th, 2009
- Old Normal Allocation Becomes New Normal? - November 17th, 2009
- Very Long-Term Asset Allocation Results - November 8th, 2009
- U.S. Healthcare Legislation Investment Impact - November 8th, 2009
- Quality Individual U.S. Companies - November 7th, 2009
 About Richard Shaw (http://www.QVMgroup.com)
Richard is a principal of QVM Group LLC, a fee-based investment advisor based in Connecticut with clients across the country. He provides investment coaching to "do-it-yourself" investors, and manages portfolios for those who prefer not to make their own decisions. His investment approach is based on value, asset allocation, benchmarking, expense control, risk management, customizing portfolios to each client's specific circumstances, and regular communication about strategy and performance. The QVM Group team also provides municipal refinance services, strategic business planning and financial analysis service for new ventures, private acquisition analysis, and custom investment research. Richard's extensive experience, includes serving on the Board of Directors of Aberdeen Asset Management PLC (London Stock Exchange: ADN), membership on the Board of Directors of Phoenix Investment Counsel (renamed Virtus Investment Advisors), a U.S. pension manager and investment advisor to the Phoenix Funds (renamed Virtus Funds), as well as serving as Managing Director of a series of offshore investment funds based in Luxembourg. He has led institutional asset management sales and had overall responsibility for management of a U.S. mutual funds broker-dealer. He was a charter investor and member of the Board of Directors of several internet companies, including Lending Tree prior to its IPO. He is a graduate of Dartmouth College. QVM Group LLC is a Registered Investment Advisor. Visit the QVM Group website http://www.qvmgroup.com/QVMinvest/ |
No recommendations, either expressed or implied, are being made to buy, sell, hold or short any of the mentioned stocks. No legal, tax or accounting advice is expressed or implied. Always contact your attorney, CPA, or tax advisor before acting on any legal or tax issues. StraightStocks.com is not responsible for the content, products, or services of any of the advertisers on this site. StraightStocks.com receives compensation from advertisers on this blog. Services and products referred to herein are trademarks, registered trademarks, servicemarks, and/or registered servicemarks of their respective trademark or servicemark owners.