.jpg)
Liffe today announced that on 1 October 2007 it will launch on the Paris derivatives market two futures contracts on indices that track the performance of European real estate companies. The two new futures contracts are based on the FTSE EPRA/NAREIT Europe Index (EPRA) and the FTSE EPRA/NAREIT Euro Zone Index (EPEU) which are seen as benchmarks in Europe for investments in listed real estate companies.
The FTSE EPRA/NAREIT Europe Index covers approximately 100 listed real estate companies based in 15 European countries with the largest weighting being the UK (45%). The FTSE EPRA/NAREIT Euro Zone Index covers approximately 50 real-estate companies based in nine Euro Zone countries, with the largest weighting being France (40%).
The futures contracts are the first of their kind in Europe and complement Liffe’s existing range of derivatives on national and pan-European equity indices. Interest in real estate linked financial instruments has grown significantly in Europe in recent years and a market has developed in OTC traded derivatives as well as ETFs, certificates and warrants.
Hugh Freedberg, Chief Executive of Liffe, said: “The contracts will provide a cost effective, simple and efficient way of gaining exposure to listed real estate companies across Europe. They can either be used to hedge a real estate exposure or to diversify an equity portfolio, as there is a low correlation to standard equity indices. Liffe is delighted to provide its customers with the very first European real estate futures.”
Mark Makepeace, Chief Executive, FTSE Group said, “FTSE is delighted to license Liffe to use the FTSE EPRA/NAREIT Index Series as the basis of new futures contracts. The FTSE EPRA/NAREIT Series is firmly established as the global standard for real estate investing and it’s great to see it being used to support the new property derivatives market too.”
Nick van Ommen, Chief Executive Officer of EPRA, said: "We believe the launch of Liffe's real estate futures contracts represents a major step in the evolution of the listed property market in Europe. This initiative puts real estate on an equal footing with the other core equity sectors and will contribute to the further development of a deep and liquid market in property stocks for investors."
Marcus Phayre-Mudge, Fund Manager, Thames River Capital, said: "This new development is very welcome. It will provide fund managers such as Thames River Capital with a further set of tools with which to shape our exposure to the market and to achieve our goal of continuing to maximize returns. We see the establishment of a fully-fledged futures market as a significant step forward in the development of the European real estate securities sector."
The indices represent general trends in eligible real estate equities and are made up of leading real estate / property companies. The indices provide a measure of the performance of these property companies and are a good proxy for direct real estate investments.
