Andrew Parsons. Photo: Matt Fatches
Category: Global REITS
Winner: Resolution
Analyst: Sophie Gibbons
Sector overview:
The Global REIT sector comprises both hedged and unhedged strategies and both active and benchmark aware managers. The Global Property Sector has displayed another period of solid performance on an absolute basis and relative to broader equity markets. Owing to broader macroeconomic challenges, many active managers found the environment challenging, with less observable outperformance over the benchmark, relative to the prior year.
Zenith says …
Zenith’s conviction is predicated on our high regard for the collective abilities of the Resolution portfolio management team, led by global portfolio manager, Andrew Parsons. Utilising a multi-portfolio manager approach, Zenith has a high regard for the level of team stability observed amongst the portfolio management team, which employs an investment process that combines top-down and bottom-up research in an effort to identify companies that are expected to generate recurring cash earnings on a consistent basis. Furthermore, Zenith believes Resolution has demonstrated success in generating outperformance on an absolute and peer relative basis, over the long term.
Interview
Andrew Parsons
Executive director
Resolution Capital
The past 12 months was a very challenging period in which we looked very closely at supply fundamentals of a couple of the key sectors, and thought potentially there was some mispricing of the risks associated with increasing supply. That was a key attribute, particularly in relation to US multi-family residential property and also self-storage. We also recognised the risk with Brexit. We didn’t put a high probability on it, but we certainly put some risk rating on Brexit, and we looked at the prices again and we thought that the market wasn’t pricing those risks accordingly. We moved to reposition the portfolio in case there was an unexpected event – which in fact did eventuate.
Clearly the shift from QE monetary policy emphasis to other policies, particularly obviously pressure on fiscal rather than monetary policy, is going to be an important issue for investors in all asset classes. REITs are no exception, and given how much focus people put on the yield trade, there are some question marks about how REITs are going to outperform in this sort of environment. That is probably the key issue people will face in the next 12 to 18 months, along with the supply picture also.
