April 2016

By | 16th May 2016

The Trust’s NAV fell -1.22% whilst the benchmark fell -1.29%. Encouragingly the share price dropped -0.2% resulting in a slight tightening of the discount to NAV. It was a better month for UK stocks which collectively rose 2%. The referendum continues to dominate investors’ thoughts and the shifting of bookmaker’s odds in favour of Remain which overlapped with Obama’s call for unity in Europe helped the London-centric names in particular. Derwent London and Great Portland were both up 4.2% with Workspace a very strong 6.6%. Our overweights in these names helped performance but the strong rebound in Capital & Counties (+7.2%) which owns the Earls Court development site was a detractor from our relative performance as we don’t own the stock given our concerns over London high value residential. The healthcare names were again strong performers with Primary Health Properties +5.9% even after an oversized raising of £150m at 100p. We participated but with some reservation over the speed of appropriate acquisitions given the size of the raise. Assura, which owns and develops polyclinics and GP surgeries let to NHS backed tenants also rose a dramatic 6.7%. The market remains risk adverse

The German residential names were quite weak in April. ADO, our preferred Berlin focused small cap, raised €100m to finance portfolio expansion and we participated in the raise. The stock fell -4.6% in the month whilst the largest apartment business, Vonovia fell -7.1%. This sub sector has had a high correlation with the Bund, which rose 20bps in April and goes someway to explaining the market response.

The earnings season also got underway in earnest with Gecina (Paris offices) reflecting yield compression and capital value growth whilst Icade’s results were a mix with improvement particularly in residential development but write downs (which were expected) in business parks. Mercialys, the owner of sub-regional shopping centres had another year of solid growth. In the Nordics, Fabege also revealed greater capital growth than expected and we added to our holding. Castellum’s figures were dominated by the earlier announcement of the purchase of Norrporten and the capital raise due after the EGM (20th May). Entra, Norway’s largest office company also showed strong results. The stock has, unsurprisingly, rallied alongside the improving oil price.

The Trust’s full year results and final dividend will be announced on 25th May.

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