TR Property Investment Trust has been given a leg up thanks to the stream of private equity investment being funnelled into the European real estate market over the past year.
Chairman of the London-listed firm David Watson said today that private equity investment into real estate “continues to be elevated” and that the Trust has “made sizeable gains from our stakes in those companies which have been taken private or merged.”
Watson added that investors recognise that “if listed property companies’ share prices are left to drift well below asset value then the private market will swoop in” which remains a “critical and valuable underpin” for the real estate investment trust’s valuation – which has hit £1.4bn in the past year.
Private equity giant Blackstone in June last year was required to increase its initial bid for St Modwen Properties by another £50m, taking its total takeover to £1.25bn.
While New York’s Brookfield, another giant private equity firm, has snapped up three major real estate stakes in recent months.
Brookfield snagged a more than 90 per cent stake in German office specialist Alstria in November, which has a market capitalisation of €3bn (£2.5bn). Followed by Brussels office property firm Befimmo in February of this year, as well as a takeover of Hibernia, Dublin’s only listed office developer.
In each of these deals, Brookfield paid substantial premiums, of at least 20 per cent, to the undisturbed share price but still acquired at close to or even below net asset value, TR Property fund manager Marcus Phayre-Mudge explained.
“Offices remain out of favour with stock market investors and therefore these businesses were – in the eyes of private equity – undervalued in the public domain,” he added.