James Sullivan has said UK real estate is one of the most attractive areas of the market, particularly REITs where he said “share prices have overshot on the downside”.
In a portfolio update, Sullivan said the 40% discounts currently on offer from real estate investment trusts (REITs) reflect an “Armageddon” scenario, which is not justified.
“We do not see that,” he said. “UK REITS have the most robust balance sheets we have seen since many of them IPO’d, coupled with attractive yields.
“They face a number challenges, but the share prices have overshot on the downside.”
Sullivan did highlight challenges to the asset class in the form of Brexit and interest rates rising faster than expected, but noted they were baked into the price already.
“As we all know, nothing irks the market more than uncertainty,” he added. “Even the eventuality of bad news may be received positively as plans can be put in place to mitigate the pain.”