
Ordinary Shares

Price (p)	149.40
Published NAV	171.60
Yield	3.89
Discount	-13.84

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

Sigma Shares

Price (p)	66.90
Published NAV	88.60
Yield	2.99
Discount	-25.20

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

For Sigma Shares

November 2009
Pan European property stocks have been range bound since the beginning of October and November was much the same - an intra month rally followed by a sell off into the month end. In the small cap space the FTSE EPRA/NAREIT Small Cap benchmark (in GBP) fell -2.02%. By 16th the index was up 3.5% from which it proceeded to give up over 5.5% into the month end. Investors are not ready to once again bid stocks up to their Dec 2010 NAVs and by the end of November prices were 7% off their mid October highs. In fact prices have drifted further down into mid December. Our view is that investors are waiting for a clearer view on (1) the bull argument that rates will remain very low into 2011 which gives a high yielding asset class like property a purchase rational or (2) the bear view that rate rise expectations evolve and property as a late cycle earnings play has little to offer in the short term. Certainly the lack of near term rental growth is consensus. Few businesses are hiring or committing to more space / stores / locations. Hanging over the sector (as with many other asset backed stocks) is the residual concern surrounding the banks attitude to real estate backed debtors. 2009 has seen very little distressed property on the market. Consequently, high quality assets such as the Silverburn shopping centre have been well bid (£305m versus £250m asking) as institutions rush to buy the asset class. However such equity (as opposed to debt) buyers are focused on the quality end of the spectrum, seeking long dated secure income. Small caps underperformed their larger brethren (the full index fell only -1.38%) and volatility remains high. By way of example, last month I commented on CA Immo and Deutsche Wohnen, stocks we underowned which both rose 14%. This month they fell 20% and 14.5% respectively. Sigma’s NAV fell only -1.52% leading to 50bps of outperformance relative to its benchmark.