Category Archives: Factsheet

The start of the new decade saw a pause in the six-month long recovery of UK property stocks from their August lows. The ‘Boris bounce’ and election euphoria has dissipated for the moment, with UK property stocks collectively returning -2.8%. However, Continental European stocks picked up the baton, returning +3.1% in euro terms and +2.3% in sterling. With the two regions combined, our benchmark return was 0.87%, slightly ahead of our net asset value (NAV) total return of 0.68%. The weaker sentiment in the UK weighed on the share price, which fell -2.3%.

The last month of the decade saw a continuation of the theme that has been running since after the summer in listed real estate names, namely the outperformance of the UK and Sweden over the rest of Europe. The UK returned 4.6% (in sterling terms) and Sweden returned 6.6% (in Swedish krona terms), while the eurozone managed just 0.8%. Looking back over the calendar year, the UK returned 29.8% (in sterling terms) and Europe ex UK returned 25.2% (in euro terms), with Sweden over contributing at 52.6%. Given these hugely positive returns, it is a surprise that Switzerland – which usually outperforms when investors are nervous – delivered 39.3% (in Swiss franc terms). The answer lies, once again, in the market’s expectation of interest rate progression. Sweden’s Riksbank indicated that it was going to return its base rate to zero (from negative) but recent expectations point to nothing higher than that. The Swiss rates, meanwhile, remain firmly in negative territory, and therefore the offer from a local-listed property company of a solid 3% dividend yield, even if it has little hope of capital growth, seems ok. We believe there are better forward-looking returns to be had elsewhere in 2020 and have therefore very little exposure to Switzerland. Our UK overweight served us well in the second half of 2019 as investors took comfort from the growing expectation of a parliamentary majority for the Conservative Party. In the end, few predicted the scale of the majority and markets are now encouraged that the prime minister can drive a sensible dialogue with Brussels, ignoring the demands from the more extreme elements of his party. However, businesses need clarity as quickly as possible.

Pan-European real estate equities enjoyed a solid month. The Trust’s net asset value (NAV) increased by 2.5% in November, while the benchmark rose 1.4%. At the regional level, the UK and Europe (in local-currency terms) performed almost identically, with the UK up 2.4% and continental Europe up 2.5% in euro terms.

Pan European real estate equities experienced a broad range of returns in October. Macro forces again dominated. The UK Parliament finally managed to agree on one thing – the date for the General Election. Currency markets took the reduced likelihood of a ‘no-deal’ Brexit positively and GBP strengthened 2.9% versus EUR over the month. GBP has now strengthened over 8% from the mid August lows.

The return to work following the summer holiday period has seen a continuation of the strong recovery (from the mid August lows) of UK property companies share prices. Whilst the overall pan European benchmark returned 2.29% (in GBP terms), the UK contributed 6.88%. This dramatic recovery means that the UK names have almost matched the performance of their Continental counterparts over the first six months of the Trust’s financial year (March -September) when viewed in local currency terms.