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REITs and the Declining US Dollar
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REITs and the Declining US Dollar
Today we highlight the declining US dollar and note that few REITs
will view currency risk as a reason to slow down their investment in
international markets.
The first REITs to invest in international developments were in the
Retail and Industrial sectors. Standouts include ProLogis Trust PLD
and Simon Property Group SPG (both PLD and SPG are S&P 500 Index REITs).
ProLogis Trust PLD invested successfully through joint venture development funds
in Europe and in Japan. Now with locations in 11 countries in Europe,
ProLogis Trust PLD is expanding into South Korea and China,
as well as Canada and Mexico.
As you can see from their web site, ProLogis Trust PLD would like to be
perceived as "the global distribution solution".
link to PLD website:
http://www.prologis.com/prologis/splash.aspx
Another Industrial REIT, AMB Property, has been adding to its international
portfolio with the acquisition of 50 properties in Paris.
AMB owns warehouses and distribution facilities in Amsterdam,
Frankfurt, Hamburg, Lyon, Paris, Guadalajara, Mexico City,
Tokyo and Shanghai.
link to AMB website:
http://www.amb.com/
Simon Property Group SPG achieved international status through direct investment
and through its acquisition of Chelsea Property Group CPG for $3.5 billion in 2004.
SPG owns more than 50 European shopping centers in France, Italy, and Poland.
SPG also owns 5 outlet centers in Japan and 1 in Mexico.
link to SPG website:
http://www.simon.com/about%5Fsimon/
Another of the S&P 500 REITs, Public Storage PSA, will complete
its acquisition of Shurgard Storage Centers SHU in order to gain control
of Shurgard's leading position as a self-storage operator in Europe.
These REITs, all offering investors both growth and liquidity, view
their international investments as a long term strategy to build
shareholder value and to serve US corporate customers seeking
US-style operations and convenience in their international markets.
None of these REITs yet derive 40% of revenues from international markets.
We think concerns over the declining dollar may hurt stocks of
consumer product companies, with as much as 60-70% of revenues
and profits from international markets, while REIT valuations
should remain largely untouched by currency concerns.
Comments from REITonAIM 05/18/2006
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