Issue 1 – January 2008

REITs

At the beginning of 2007, most of the real estate companies already quoted on the main stock market converted to REIT status and all but one of the rest followed soon afterwards. Everything looked serene and set fair.

Unfortunately, despite the enthusiasm with which REITs were universally embraced, they were unable to escape the general down rating of commercial property companies as a result of the drying up of finance and loss of investor confidence in the second half of the year and the expected flow of new conversions atrophied.

The big pub companies, which had been widely tipped to be the next converters to REITs, all decided that conversion was a step too far in the current economic climate. Another notable casualty in the leisure and hospitality sector was the abandonment of the proposed Vector flotation and subsequent conversion to a REIT. This transaction involved the bundling of some top branded hotels, including Marriott, Hilton, Hotel Du Vin, and Malmaison, and when it was pulled the change of investor sentiment was plain for all to see.

For further information contact susan.freeman@mishcon.com