
Ordinary Shares

Price (p)	158.00
Published NAV	173.30
Yield	3.86
Discount	-9.11

Prices correct as of close 2012-02-03. Last Published NAV is as at the previous business day. Source: Trustnet

Sigma Shares

Price (p)	65.10
Published NAV	90.60
Yield	1.92
Discount	-28.83

Prices correct as of close 2012-02-03. Last Published NAV is as at the previous business day. Source: Trustnet

For Ordinary Shares

November 2011
Pan-European real estate equities fell by 5.2% in the month. On the face of it - not a good month. However, this figure reflected a remarkable change in investor sentiment in the last week of the month. From 1- 25 November, real estate equities were down nearly 14%, only to stage a 9% recovery in the last five days of the month. November was the mirror image of October (which saw 3 weeks of 'risk-on' with a 13% rally, followed by a correction in the last five days). Markets remain sentiment driven, overshadowed by the next 'noise' on the eurozone political landscape. After the mild euphoria in the run up to the summit on 27 October, November saw investors focus on the lengthy timetable that any political solution by the 17 member states would require. Markets danced to a faster beat and the crisis in Italy pushed 2-yr sovereign debt yields to over 7% - an unsustainable level. Whilst Greece is peripheral, Italy is not. As we enter December, there appears to be renewed political momentum and coordination of response between Germany and France - the decision makers. Our strategy remains bottom-up with the focus on positioning the Fund for an enhanced period of economic slowdown across Europe - our best case scenario. All is not doom and gloom, however, equity repricing has resulted in the sector offering earnings yields of 6.75% with dividend yields of 5.5%, all covered and rising. Discounts to current NAV are now in excess of 15%.

Unsurprisingly, the Italian stocks, Beni Stabili and IGD were both hit hard, falling 28% and 26.8% respectively. Such is their volatility they recovered 14% and 10% in the first week of December. In a 'risk-off' period, once again the Swiss (-3%) and Belgium (-0.4%) companies outperformed, falling far less than the broader property equity market. Whilst the Fund is underweight both Switzerland and Belgium, it is overweight the UK stocks on grounds of both valuation and currency. The UK stocks outperformed falling -2.2%. The weakest performer of the large caps was Segro which fell 7.6%, mainly on the expectation that a change in strategy would result in a large scale sales programme. Grainger was the top performer (+30%) announcing that it completed its refinancing (£0.9bn). Whilst good news, the increased interest bill will lead to reduced earnings.

In Germany, Deutsche Wohnen completed a 1 for 4 rights issue at €9.1 per share; we took up our rights and remain overweight German residential property through Deutsche Wohnen, GSW and TAG. The Fund was a small net seller over the month. The largest purchase was the rights issue take-up.