How to invest in REITs in the UK and Europe

Investing in REITs can be a sensible alternative to buying property, but picking the right one is a challenge. Marcus Phayre-Mudge’s trust boasts commercial real estate experts with a proven record

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Special Opportunities Reit may not have succeeded in raising the £250 million it was seeking, but in the view of Marcus Phayre-Mudge, manager of the TR Property Investment Trust (LSE: TRY), the attempt marked a turning point in the sector’s fortunes. He was seeking to be a cornerstone investor in the stock market flotation of a new real-estate investment trust internally managed by a proven and highly regarded team. It wanted to take advantage of opportunities in a market that, although not experiencing the distress of 2009, is seeing selling from open-ended property funds, shrinking defined benefit pension schemes and private-equity funds with debt, all of whom want to liquidate.

However, investors were reluctant to pay £1 for shares that, until invested, would hold 98p of cash when so many Reits are trading at large discounts to net asset value (NAV). TRY itself trades on a discount of 8%, yet is almost entirely invested in listed Reits, which, on average, trade at a 25% discount. Phayre-Mudge warns that “valuations are still falling, but the pace of [decline] has slowed or stopped”. Property valuations are based on transactions in the market, so they are always backward-looking. 

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.