The Yield Tracker #29: EUROPE | Property & Real Estate

Research evidence excerpt

The Yield Tracker #29: EUROPE | Property & Real Estate

Property & Real Estate

Equity Research

July 20, 2026

Company analysis

European appraisers are usually backward-looking, thus taking time to adjust their valuation

assumptions as they usually wait for evidence in the transaction market (although value

adjustments seem more rapid in the current cycle than in previous ones). By reconstituting each

portfolio with current market data, we can derive an approximation of how the stock market is

aligned (or not) with current direct market yields. Looking at the difference between implied yields

by the equity market and spot direct market yields, the listed market tends to consistently gauge

current direct market pricing. The equity market-implied yields illustrate the theoretical portfolio

yield, taking into account current leverages, portfolio yields, and NAV discounts.

We could argue that when NIYs are below market yields, portfolios are overvalued. Although we

acknowledge that prime gross yields and net initial yields are not totally comparable, we think the

analysis is still highly valuable, as the correlation has been strong in the long term. In parallel, even if

not all portfolios can be considered as Prime, we observe that the correlation between market prime

yields and implied yields is strong, suggesting that when the implied yield is largely above the

market yield, the share price is undervalued. Obviously, as seen with some companies (logistics,

for example), the implied yield is sometimes below the prime market yield, reflecting higher growth

expected going forward and large value creation from the pipeline.

We detail: 1) market trends for several countries and several asset classes; 2) the impact of