Category Archives: Factsheet

December brought a strong end to the calendar year with the net asset value (NAV) rising +1.8%, while the benchmark rose 0.6%. The share price gained 2.7% over the month, which brought the share price total return for the year to 23.5%; this reflects both the 18.6% growth in the NAV over 12 months and the discount (price/NAV) narrowing to less than 1%. The narrowing discount reflects an increased appetite for (relatively) high yielding real assets, which offer the potential for inflation protection – particularly where the underlying income is index-linked. We expect this theme to continue into 2022.

November was a positive month for real estate equities, and the FTSE EPRA/Nareit Developed Europe TR Index (in sterling) rose +1.1%. The trust’s net asset value (NAV) total return was just behind at +1.0%. In fact, the real estate sector was the third strongest among all the global industry classifications, with the Europe-wide STOXX 600 falling -2.5%. The month began strongly with our sector continuing its rally from October; this was driven by dovish commentary from both the Bank of England (no base rate increase at its November meeting) and the European Central Bank. Sector darlings such as logistics, industrial and self-storage performed well alongside the most leveraged group (Swedish stocks), which have been much discussed in previous monthlies. The latter part of the month saw news dominated by Covid-19’s new variant, which led to considerable price retrenchment among retail and hospitality focused companies; this was despite many shopping centre owners reporting footfall close to, or at, pre-pandemic levels.

Pan European real estate equities enjoyed a healthy recovery after the weakness seen in September. The Trust’s net asset value (NAV) rose +4.4%, while the benchmark gained +3.7%. The share price didn’t quite keep up with the NAV and rose +3.6%. Continental European real estate equities performed strongly and collectively rallied +5.5% in euro terms. Meanwhile, UK companies gained +3.6% in sterling terms.

The Trust’s net asset value (NAV) fell -7.5% in September, the first negative monthly performance in this financial year (31st March year-end). The benchmark, pan-European real estate securities (EPRA Developed Europe, Net total returns) returned an even poorer -8.3% in sterling terms. It was the second-worst performing Global Industry Classification Standard sector (only utilities fared worse) on the back of increasing inflation fears and rising bond yields. Over the month, 10-year government yields soared by around 20-30bps across Europe and the UK.

Pan European real estate equities returned a healthy 3.2% (in sterling) in what is traditionally the quietest month of the year, and the Trust’s net asset value rose slightly more at 3.3%. A tug of war continues between an abundant supply of liquidity (the ’there is no alternative’ mindset) and investor worries; this drives a lack of conviction around the macroeconomics. The Jackson Hole symposium provided little new information for market participants, and bond yields have demonstrated little volatility. For many parts of the real estate landscape, the outlook is favourable. Inflation is here and, whether you view it as temporary or persistent, you want to protect your earnings. For this reason, index-linked income or earnings which respond to economic growth are attractive.