A very strong month for pan European real estate equites with the benchmark returning 8.6%. European equities continued their outperformance of other regions with the Stoxx Europe 600 rising 3.9% whilst MSCI World managed just 0.6% and the S&P saw a total return fall of -0.8% (in US dollars). Essentially property names ‘caught a bid’ on a combination of the expectation of further falls in short rates, a stabilisation of the longer end of the yield curve and improving market fundamentals evidenced through strong rental growth in prime assets across many sectors. However, the fact that real estate equities are generally under owned given their ‘value’ rather than ‘growth’ equity characteristics certainly had a part to play in the price surge. Given that this commentary is being written a week into March (and read a fortnight into the month) these explanations about the hugely positive returns in February will already feel out of date and somewhat historic. Macro-driven volatility, three words which sum up and simultaneously underplay the gyrations seen in the first five trading days of March.

Returning briefly to February, the Trust’s net asset value rose 9.7% delivering 106 basis points (bps) of relative outperformance. The drivers of returns were a mixture of gearing (111% exposure to equities), sector and stock selection. The portfolio is underweight Sweden collectively and London offices, both of which underperformed the benchmark. Top performing names included Merlin, up 20% on further datacentre news, and Intea (17.7%) on accretive acquisitions and valuation gains on new market evidence. German residential performed strongly and our overweights to TAG and LEG, outweighed our underweight to Vonovia. European shopping centres also did well with Eurocommercial (14.5%) and Unibail (14.1%) outperforming. Sirius (13.9%) announced a successful accelerated bookbuild at just a 1% discount to the previous close. The £77m proceeds will be used to acquire defence-related industrial assets in Germany.

Overall leverage in the portfolio didn’t change over the month. The principal sector / stock changes were a reduction in German residential exposure (profit taking in Vonovia and LEG), alongside selling down in British Land and out of Cibus. The latter saw a disappointing change in CEO. Additions were in Landsec (rotated from British Land) and in our industrial exposure through Segro (reducing the underweight ahead of results) and in Sagax (our preferred Swedish industrial play which had underperformed throughout Q1).

The results season was, as always, eventful. Whilst most companies delivered on or exceeded expectations any which ‘missed’ either their own forecasts or consensus were heavily punished. The poster child of poor performance was – and it’s hard to believe given the recent corporate-acquisition debacle – Unite (-11%) a near 20% underperformance over the month compared to the benchmark. Unite’s acquisition of Empiric was underwritten by an expectation of 92% occupancy, this was dropped to 85% just weeks after the deal was cemented. It would appear that the company’s management team have completely misread the changing market dynamics. The Unite share price ended the month at 504p, 40% below the figure a year ago. Shareholders need to / should demand a greater board response. There have been just too many missteps and a consequential loss of faith in management leading to a share price spiral as investors abandon the name.

	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