ING’s UK Real Estate Trust Reports Big Gains

The Real Estate Income Trust started by financial giant ING has similar advantages as a traditional real estate investment trust (REIT), according to the UK bureau of the Financial Times. The trust invests in properties in the UK, the Isle of Man and the Channel Islands, and funnels money exclusively into commercial properties.

The properties in its portfolios are worth £505m, and the fund has about £200m in debt. The cost of servicing the debt is about 5 percent annually, and it has been hedged against future interest rate hikes over the next seven years. The fund aims to capitalize on the booming London commercial real estate market, with about 45 percent of its holdings tied to the city or surrounding communities.

“We don’t think it’s overvalued. We think we’ll see more growth from commercial property,” said Elliot Caldwell, the fund’s manager. “Over the long run, you would hope your returns were in line with the returns of the direct property,” he says.

ING’s UK Real Estate Income Trust is up 13.71 percent in the past six months, according to data from Standard & Poor’s. This compares with the average 18.86 per cent rise by UK REITs over the same period. In the past three years, the fund has reported a 203 per cent return against the average 181.87 percent return posted by global trusts.

As with Florida real estate investment trusts, a market constantly in demand is likely to produce solid annual leads. Investors should be aware, however, that in the past 10 years, the booming U.S. housing landscape has actually been matched, in terms of performance, by the stock market. So diversifying your portfolio to include both is probably the best move.