UK 鈥� Uncertainty over real estate investment trusts in the UK is 鈥渙verdone鈥� Merrill Lynch reckons.
鈥淲e think fears and uncertainty on bonds, yield compression, consumption and REITS, are all overdone,鈥� Merrill said in a research note.
鈥淭here has been lots of speculation for months now on UK-REITs and the lingering doubt among domestic fund managers that REITs may not happen,鈥� research analysts Robert Fowlds, Bernd Stahli and Alec Pelmore said.
鈥淲e think there is a better than 50/50 chance that REITs happen, and we expect full REIT legislation in the March 2006 budget, and perhaps a progress report with the Pre-Budget Report at around the end of November.鈥�
The UK Treasury unveiled a discussion paper on REITs alongside the 2004 budget and says it is 鈥渃ommitted in principle鈥� to reforming the taxation of property investment. According to the Treasury web site, the government aims to legislate for a UK-REIT in the 2006 Finance Bill.
Referring to large UK real estate firms, the Merrill analysts added: 鈥淭he UK majors are on an average discount to NAV [net asset value] of 19%, with the prospect of good results to come next month. We are not capitulating.鈥�
The firm has a BUY rating on the sector and made bullish comments about Slough Estates Liberty, MWB and Land Securities.
