It is acceptable for listed shopping centre specialists to have a slightly higher gearing than their peers who invest in other real estate segments, according to Matthias Storm, head of real estate at Kempen Capital Management.

Speaking at the annual EPRA Insight event in Amsterdam on Wednesday, Storm said it made more sense for companies focused on shopping centres to enhance and expand their holdings through development and redevelopment. This can entail higher levels of gearing, he added.

'From our point of view we are not worried about the leverage of most listed shopping centre companies in Europe - with maybe one or two exceptions.'

Storm was responding to the suggestion that shareholders would be better off if companies kept their loan to value ratios low. In a presentation, John Lutzius, managing director at Green Street Advisors, said the widely accepted level of 40% leverage in the listed European property sector was ‘on the high side’. Lutzius would prefer to see levels of 20% to 30%.

During a panel discussion, Gerard Groener, CEO of Corio, noted that his company’s LTV ceiling was around 40%. Prior to the crisis, Wereldhave had a lower loan-to-value ratio of about 28%, said the company's head Hans Pars. Since the onset of the crisis, however, Wereldhave has been operating within a defined band of between 35-45%. Both companies have European shopping centre portfolios.

Storm pointed out that it was mostly listed companies investing in the office and industrial sector who had got into trouble in recent years due to being over-leveraged.

At the same EPRA event held last week in London, Chris Grigg, CEO of British Land, said he was 'comfortable' with 45% at this stage in the cycle. His counterpart at Hammerson David Atkins pointed out that his company already has a leverage in the low 30s. For Hammerson finding a 'sustainable level of debt' is the most important objective, he added.