
Ordinary Shares

Price (p)	149.00
Published NAV	170.30
Yield	3.89
Discount	-13.91

Prices correct as of close 2010-09-06. Last Published NAV is as at the previous business day. Source: Trustnet

Sigma Shares

Price (p)	66.70
Published NAV	88.10
Yield	3.00
Discount	-24.69

Prices correct as of close 2010-09-06. Last Published NAV is as at the previous business day. Source: Trustnet

For Sigma Shares

January 2009
The first month of 2009 continued to exhibit two key characteristics of the pan European real estate equity market of 2008, namely the enhanced level of volatility at the stock level together with the relative outperformance (in local currency) of Continental Europe over the UK. The equity benchmark, FTSE EPRA/NAREIT Europe (in GBP) fell -13.2% over the month but at the regional level things were very different with Continental Europe (in EUR) falling only -0.88% whilst the UK (in GBP) fell an astonishing -22.2%. To illustrate the volatility, the UK stocks started the month very strongly, up over 12% in the first 4 trading days. This was then followed by a steady correction downwards resulting in an intra-month move of over 30%. Investors became increasingly concerned about the state of UK property company balance sheets and the rising probability of them breaching loan covenants. That eventuality is clearly unwelcome and to be avoided, and recapitalisations were anticipated. These fears, shared by us, were not unfounded and both British Land and Hammerson have announced deeply discounted rights issues in early February. Sigma’s rotation into small cap stocks means that the fund is underweight (relative to the benchmark) these UK large cap stocks as well as holding over 15% cash. Both strategies contributed to relative performance. Sigma’s NAV fell -10.93% leading to 232 bps of outperformance. Over the month, Sigma was a small net investor (£0.35m). Purchases remained focused on the larger small cap names, particularly those with defensively structured balance sheets. This is a strategy we have used for sometime now and it remains valid as risk is not being rewarded. Purchases include Wereldhave (Nl.), Befimmo (Bel.), Derwent London and Helical Bar (UK). Sales were widespread and reflected concerns with capital structures, such as Brixton and Sponda or businesses with significant landbanks (where development opportunities have temporarily evaporated) like St Modwen, Plaza Centres and Kardan (GTC).