Green Street



Bloomberg: Europe’s Buoyant Property Markets Help Hide Executives’ Failings

According to Bloomberg,

A lot of real estate executives in Europe are doing nothing to add value to their firms, and buoyant property markets are helping to hide their failings.

The managers of about 40% of European real estate investment trusts have failed to take action that enhanced their companies’ returns over the past three years, according to a report by research firm Green Street Advisors. The management team at Intu Properties Plc, whose shares have plunged 68% this year, placed last in the study. Barcelona-based Inmobiliaria Colonial Socimi SA earned the highest grade.


“Total shareholder returns convey a lot of information about managerial performance,” Green Street analysts including Peter Papadakos wrote in the report published on Thursday. “But returns are primarily influenced by whether a given REIT happened to own the right type of real estate in the right location.”


Companies that borrowed heavily and were subsequently forced to raise capital right after the financial crisis typically rank among the weakest in Green Street’s analysis of so-called Management Value Added in 42 REITs over the long term.

“Some European REITs have learned the lessons from that experience, although a surprisingly high number still employ leverage that exceeds the norms that prevailed” in the run-up to the crash, Papadakos wrote.

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