In a research note titled ‘Operators of space’ no longer ‘collectors of rent’, highly-rated Real Estate Research Analyst Miranda Cockburn initiated coverage of UK listed property companies and REITs.
The note looks at companies with sustainable income streams, dividend growth and earnings – even if they are in different sectors – rather than NAV growth potential. This is a new way of looking at property companies in which to invest.
The way tenants look at property has changed (rent residential vs buy, short-term flexible office space vs long-term lease) so the way investors look at property companies should also change. This means more management is required but also likely means higher yields.
Miranda’s second initiation note, titled ‘Feeding a need for yield’, looked at the stocks of companies which have relatively long lease lengths (11-30 years) as well as a high proportion of fixed/RPI review structures. These companies typically have more predictable income streams.