RE: Strategic Review Update13 Jun 2024 12:42
IMO this was caused a lot because of poor regulation of LDIs, pension schemes used these to get cash which they invested in REITs while they were expanding i.e. shares raises. After the Gilt crash they needed to sell the REITs to cover liabilities and since then there is just not enough cash around/willing to take up this shortfall. Sure REIT share prices would have gone down anyway but not to this extent. We are now looking at a situation where a lot of people are nursing loses and desperate to reduce these so the only way out is to sell off all the properties in the REIT and return funds. When interest rates drop eventually the prices will go up and pressure reduced to shut down but this seems to go back by 1 month every month. For now make to most of it, high yield, potential capital growth or more money returned if closed down. The REITs should take some of the blame, instead of looking for more cash to expand they could have paid of some debt and used some new debt to buy back shares along with a few property sales when prices crashed, this would reduce to size of the REIT market place and increase NAV. At some point after a number of REITs are folded, interest rates reduced there will be a better balance between REITs and cash available/willing to invest.