The recovery in real estate equity pricing – which started in October – accelerated in December with our benchmark returning a huge +11.1% in the month. The Trust’s NAV was slightly stronger at +11.3% but the share price was the clear winner returning +13.9% with the discount tightening to less than -7%. The strong performance in the last quarter of the year, drove the NAV return for calendar 2023 to a healthy +17% and a share price total return of +18.3%.
We are now experiencing the positive aspects of being viewed as an interest rate sensitive asset class. Markets are now pricing in cuts in base rates in 2024 across the US, UK and Europe. Our sector had been heavily shorted (and under owned by long managers). Technical position adjustment (and short closing) helped drive the strong recovery in Q4.
Performance was strongest in the most leveraged names (which were trading at the most discounted prices) such as Sweden’s SBB (+35.8%), Nyfosa (+39.2%) and Dios (+22.4%). Whilst the fund didn’t hold these such leveraged names we made valuable gains in Catena (+20.8%) and Sagax (+16.6%). The latter completed an opportunistic capital raise (it trades at a substantial premium) at SEK 212 per share and we participated, investing £15m. The stock ended the month at SEK 277 (30% gain between the capital raise price and the month end). Out of the top 10 performers in the month, 8 were Swedish highlighting the performance of the most leveraged companies.
The largest portfolio changes in the month was Segro (-2.3% of NAV). We remain heavily overweight Industrials (which continue to have the greatest rental growth prospects in our view) but rotated from the largest name into more of our favourite small caps, Catena in Sweden and Argan in France. I continued to reduce the underweight in Unibail-Rodamco who will benefit early from any reduction in the cost of debt in their US portfolio. I also closed the underweight in Shurgard, the pan European self storage operator who now has greater growth prospects than the UK only names (Big Yellow and Safestore). The other piece of UK corporate news was the announcement that Picton Property would not be pursuing their interest in UK Commercial Property Reit as the largest shareholder of the latter, Phoenix Life with over 40% publicly declined to support the idea. We continue to admire Picton’s desire to be part of a larger listed company, it is exactly what so many of these tiny listed vehicles should be trying to do. Whilst, the Picton / UKCM opportunity suffered from a controlling shareholder dictating the direction of travel, more often the problem is the lack of response from a broad church of shareholders. Whilst the positive operating synergies and liquidity improvements from larger market capitalisations are utterly undeniable benefits, shareholders need to make their voices heard. Vested interests (boards and management happy to maintain the status quo) will only listen when the owners of these businesses actively demand action.
Discrete rolling annual performance (%)
Performance data is in GBP £ terms. Investors should be aware that past performance should not be considered a guide to future performance. All fund performance data is net of all fees and expenses.
As at date 30.06.2026
| 2025/2026 | 2024/2025 | 2023/2024 | 2022/2023 | 2021/2022 | |
| NAV (Inc) | – 0.5 | 11.6 | 22.5 | – 19.3 | – 16.5 |
| Benchmark | – 0.1 | 9.7 | 21.4 | – 19.8 | – 21.5 |
| Share Price | – 2.0 | 13.8 | 22.5 | – 24.5 | – 13.5 |
