Local authority property investment is stuck in a dichotomy. On one end is the CCLA property fund. A great and consistent fund, but like most property investment, rather illiquid. On the other end are Councils conducting commercial property investment directly themselves. Following the changes recently enacted by the PWLB, it would appear these are being discouraged.
However, there are alternatives to these two poles: the equator. In this case, a REIT. But which REIT should you choose? There are so many, and some rather volatile! So which REIT would suit both your investment appetite and criteria from both an income return, capital preservation and volatility perspective? Different REITs have a variety of focuses, which fall into distinct categories:
Each Local Authority will have a different appetite for such investment, and which areas to focus. With careful selection, a portfolio of REITs can be selected in order to minimise volatility, maximise income return, and preserve capital.
REITs are a wider strategic fund portfolio diversifier away from equity, bond or multi-asset investment and diversifies property investment away from the CCLA Property fund exposure that so many local authorities have. As many of you reading this will know, diversification is key. REITs also provide property exposure without the council needing to commit themselves to significant commercial property exposure themselves.
For more information on REIT selection for your portfolio please contact Stuart Jones on sjones@arlingclose.com
For more information on accounting for REITs, please contact David Green on dgreen@arlingclose.com
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