Concern raised over Reits

12 November 2007
A "bearish market and cautious lending" could put the value of UK real estate investment trusts (Reits) into jeopardy, a report claims.

According to Reuters, Reits may be forced to sell assets and half expansion plans next year due to pressure on capital reserves, reports the Guardian.

Lehman Brothers' property analyst Mike Prew told the newspaper that Reits were threatened by the closed equity market, restricted debt facilities and a permafrost in the investent sector.

"Reits have to worry more about sourcing capital than asset value preservation," he added.

The report suggested that despite real estate debt increasing there were other indications that confidence was flagging.

Royal Bank of Scotland analyst Michael Cox told the news provider that Reits should "ration capital".

Meanwhile the new German Reit market is looking like it will expand significantly over the next year, according to Ian Hally, investment director of real estate securities at Scottish Widows Investment Partnership.

Find out more about the investment trusts

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