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Alternative Market Briefing

Cube's real estate hedge fund keeps exposure to Singapore low, expects returns from Hong Kong and Australia (2)

Wednesday, March 17, 2010

Benedicte Gravrand, Opalesque London:

This is the second part of the article. To view Part One (Cube Capital: Tokyo real estate prospects will remain positive even if Japan's long-term prospects are not) which was published yesterday: Source.

REITs REITs are a big part of CARE's Japan portfolio; indeed it is cheaper to buy equity of listed REITs selling these assets rather than actually buying the physical assets. Also, one can get more debt imbedded in REITs (it is not so easy to borrow from Japanese banks) and these products are highly regulated.

A real estate investment trust (REIT) is a real estate company that offers common shares to the public, with two unique features: its primary business is managing groups of income-producing properties and it must distribute most of its profits as dividends.

The players in the Asian REITs market include foreigners (50%), who are mainly short-term, according to Nick Linnane, co-manager of Cube Capital's Asia Real Estate Securities Fund (CARE). Other players are mutual funds (foreign and Japanese) from which there has been a substantial inflow since last year; Japanese regional banks and individual investors.

"REITs' market capitalisation is $30bn in Japan (with 41 REITS, some in the process of consolidating)," L......................

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