Category Archives: Factsheet

Pan European property equities had a torrid month with our benchmark, FTSE EPRA Nareit Developed Europe (total returns, in sterling terms) falling -6.1%. Continental Europe fared even worse, returning -7.7% (in euro terms). The Trust’s net asset value total return was slightly better, falling -5.3% and the share price fell 3%.

For equities, this was a volatile month of two halves. Given escalation of the war in Ukraine, the property benchmark declined -8.2% in sterling terms through 7^th March. The benchmark then rebounded by +11.4% over the following three weeks. The Trust’s net asset value (NAV) gained +2.9% and outperformed the benchmark by +0.66%.

In summary, over February, investor sentiment was driven by macroeconomic events alongside a handful of corporate events (within our small real estate world). The second half of February was, clearly, dominated by the tragedy unfolding in Ukraine. This historical and terrible geo-political event essentially added huge uncertainty to the backdrop of inflation-averse central bank behaviour. Across the globe, we saw risk assets accelerate their declines as markets absorb the multiple threats to economic growth.

Real estate stocks were not immune from the weakness in global equities as the new year got underway. The expectation of US Federal Reserve policy tightening has now become a reality. This news was coupled with firm indications that the world’s most important central bank is not concerned about short term (downward) adjustments to risk asset pricing; this is not their priority. This confirmation of market expectations impacted highly rated ‘growth’ stocks more than ‘value’ companies, and real estate (while a leveraged asset class) sits more in value than growth (with a handful of exceptions). As a result, the Trust’s benchmark fell ‘only’ -3.6% whilst Nasdaq was down – 9% in the month.

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.