This recording was first shared on Investor Meets Company.
TR Property’s fund manager Marcus Phayre-Mudge and Investment Trust Sales Manager Peter Brown presented on the Trust’s annual results for the year end March 2024. During the presentation, Marcus discussed the expectations for the listed real estate market in the second half of 2024 and beyond. Additionally, there was a Q&A with Marcus, where existing and potential shareholders had the chance to ask questions.
Watch the full presentation here:
There were a handful of questions not answered live during the meeting; please find their answers below:
Q: At current property pricing levels and interest rates how do you think about return premiums versus government debt?
The long run history has seen real estate trade at +250bps margin over fixed income to compensate for depreciation, credit risk etc. The attraction is where the spread is wider and more importantly where we have rental growth, i.e. the income from real estate is rising whilst fixed income is fixed.
Q: Have you identified any good opportunities for the trust to increase direct property ownership?
Yes, we are currently evaluating c£50m of opportunities. Last month we were outbid on an industrial estate opportunity. The eventual buyer owned another asset in close proximity (i.e. partial special buyer).
Q: As the return in the last 5 years is a 7.7% loss where and when do you think the catalyst for change will come from?
The last 5 years includes both the pandemic and the dramatic change in the cost of capital brought on by central banks seeking to overcome inflation stoked by the pandemic driven monetary stimulus. Looking forward, inflation (pan Europe) is rapidly slowing ,rates have begun to be cut (and will fall further) whilst the lack of speculative development and the overall cost of construction has restricted new development. Falling cost of debt, new tenant demand and restricted supply of new real estate should create an environment for rental growth.
