Solactive AG has licensed the Solactive - B-BRE Israel Commercial Real Estate Index which is used for the IBI Israel Commercial Real Estate Tracking Fund issued by IBI Investment House on the 10th December in Tel-Aviv (TASE).
The Solactive - B-BRE Israel Commercial Real Estate (CRE) Index has been designed to follow the listed commercial real estate sector in Israel. In the absence of a significant REIT sector, the Index includes the major commercial real estate companies and uses B-BRE's methodology to simulate investment in this sector in Israel.
According to Bregman Baraz Real Estate Research, the Israeli CRE market is relatively young and growing, with the bulk of modern properties dating only to the last 10-15 years. Listed real estate companies own around USD 20 B of properties (estimated to constitute around 30% of the total CRE market, making it comparable in size to the Finnish CRE market). The Israeli market has demonstrated stability and resilience in the past few years, even during the 2008-2009 crisis, with a minimal shift in capitalization rates. Currently, Israeli real estate companies are enjoying relatively high capitalization rates and spreads (both in historical perspective and in comparison to the US; spreads of ca. 500-550 bp in Israel as compared with 400 bp in the US).
Henning Kahre, Head of Equity Indexing, Solactive, said: “We are pleased to launch our first Israeli equity index on an interesting investment theme, and by doing so to fill in a gap in the local market, targeting specifically the Israeli CRE Market.”
Daniel Baraz, Ph.D., Bregman-Baraz Real Estate, said: “The Israel Commercial Real Estate Tracking Fund has been created for investors who do not have the ability to invest directly in the properties themselves, and it enables them to participate in this growing and attractive market. The index offers the investors superior diversification and risk-adjusted returns.”
The Solactive – B-BRE Israel Commercial Real Estate Index is based on 100 at the close of trading on the start date, December 29th, 2011. The Index is fully reconstituted once a year in June, and reweighted in December. The Index is a total return index, calculated and published in ILS.
The index outperformed the Tel Aviv 100 Index (the Israeli broad market index and US REIT benchmarks since inception, with a cumulative return of 72.6%, or 20.6% annualized, between 31/12/2011 and 30/11/2014. The index also enjoys low correlation with other assets. Its correlation to US REITs is very low, thus offering significant portfolio diversification benefits.
For more information, please visit the Solactive – B-BRE Israel Commercial Real Estate webpage.