View more on these topics

New Star warns that Reit yields may be lower than expected

New Star is warning advisers and investors that yields on real estate investment trusts could be nowhere near as high as many are anticipating.

Research by the fund manager found that estimated yield returns from listed property firms post-Reit conversion came in at between 2.6 and 3.5 per cent, with most towards the lower end of this projection.

Estimated yields from the two biggest UK-listed property firms, British Land and Land Securities, was even lower. New Star says at its current share price of 1625p, British Land is likely to pay a gross yield of around 2 per cent before tax while Land Securities will yield around 2.2 per cent at its current price of 2198p.

Land Securities, along with rival property companies Slough Estates and Brixton, has already warned the market not to expect big yield increases when they convert.

New Star property trust co-manager Marcus Langlands Pearse says he welcomes Reits as their introduction increases the focus on property but he does not see them as a major competitor to bricks and mortar funds as they are less of a diversifier, being listed and subject to market movements.

He says: “Many investors realise that all Reits are is property companies with a tax break and do not expect them to behave like totally different animals. The reason property became the third asset class was to diversify to avoid volatility so they will not get this by investing in Reits.

“A lot of IFAs are recommending between 10 and 20 per cent returns from the property sector but investors could be disappointed if they expect yields that high from Reits. We expect most companies to yield between 2.6 and 3.5 per cent, with most towards the lower level.”


Currie secrets

Four groups dominate the competitive world of equity income but a new fund frun by the shrewd Scott McKenzie could be about to challenge their hegemony.

Davy brands Brown “ridiculous” over PTA U-turn

Gordon Brown should be congratulating people for taking out pension term assurance rather than discouraging them, says SimplyBiz chairman Ken Davy.Davy sent out a message to his 3,000 member IFAs saying it was ridiculous that the Treasury should attack tax relief on PTA. Davy says: “I believe it is ridiculous for the Treasury to attack […]

FSA warns ‘significant minority’ over interest-only mortgages

The FSA has warned of the potential dangers for a ‘significant minority’ of consumers taking out interest-only mortgages without robust repayment strategies in place.The note of caution follows research conducted by the regulator to test how borrowers who have taken out such a mortgage intend to repay it and the extent to which these consumers […]

Zurich says it’s not entering the wrap race

Zurich has ruled itself out of the wrap race, saying it sees better value investing in its extranet and developing links with external platforms and portals.Zurich Intermediary Group has been monitoring the wrap market since 2000 and believes only 15 per cent of advisers will adopt a full wrap by 2008, with 60 per cent […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm