German Residential Property (Part III)

Tags

absolute return, Austria, dividend yield, financial crisis, financial derivatives, German bunds, German property, Germany, home ownership, income/dividend bubble, intrinsic value, land grab, Leverage, Margin of Safety, Mr. Market, NAV discount, Net LTV, Price/Book, REIT/MLP sector, relative value, rental yield, residential property, safe-havens, special situations

Continued from here.

OK, now we’ve looked at German residential property fundamentals. The current supply/demand & home ownership rate, rental yields, safe-haven status, and particularly the low valuations, certainly appear to offer a persuasive investment case. So, how do we exploit it?!

As I’ve said, I’m perplexed by the general investor obsession over direct property investment. What a hassle! And let’s correct a key misconception: People say they prefer direct investment as they can leverage it up – something you can’t, or shouldn’t, do with an equity investment! Yeah, sounds logical…but it’s complete rubbish! That coveted (?!) leverage is already embedded in listed companies (and far more efficiently/cheaply than you could obtain).

Let’s say you’ve a spare 300 K knockin’ around. You could buy a 1 mio property, with the help of a 70% mortgage (and years/decades of property/tenant headaches to come!). Or you could invest in the equity of a listed property company that owns 1 mio of property (with the same 70% leverage). All at the click of a button & an occasional read of their financial reports. What an easy choice… OK, but who knows where the hell the share price might trade?!

Asset Managers – A First Look at the Alternatives

Tags

% of AUM, 3i Group, alternative assets, Apollo Global, Argo Group, Blackstone, Carlyle Group, Cowen, developed markets, distressed assets, emerging markets, Fortress, Janus Capital, KKR, Mr. Market, Oaktree Capital, Och-Ziff, Record plc, special situations, Tetragon Financial

We’ve just witnessed the rather limp launches of Oaktree Capital & Carlyle Group (reflecting the current malaise in asset manager valuations), so it’s a good time to look more closely at the asset manager universe. But where to start? Well, the boring end of the spectrum, I guess:

Traditional managers are dime a dozen, with little to distinguish them. Most focus on developed markets (reflecting a rather timid clientele), and demonstrate no particular ability to outperform the market over time. They now face relentless competition from an ever-expanding ETF universe which, on average, easily matches them on performance and wallops them on fees.