July was a positive month for pan-European real estate equities, with a raft of first-half results alongside two large capital raises and the announcement of an anticipated major disposal. The Trust’s net asset value (NAV) rose 3.9% and outperformed the benchmark, which returned 3.0%. However, it was the share price gain of 10% that was the outstanding feature of the period, with the discount to NAV narrowing from over 8% to less than 5%.
The broad message from the initial wave of first-half results was that net letting was generally solid across most sectors and, in some cases, better than expected. Where there was weakness (and again widely expected), it was in non-CBD office locations. Meanwhile, those companies with stronger balance sheets are clearly going on the front foot with earnings accretive opportunistic acquisitions, buying from motivated sellers. Klépierre (our second largest holding and our largest European shopping centre exposure) produced strong results alongside updates on its recent purchases of shopping centres in Paris (O’Parinor) and Rome (RomaEst) for a total of €238m. The company also increased its full-year earnings guidance and the stock returned 9.9% over July. Other Continental retail companies including Mercialys, Carmila and Unibail all showed operating income improvements from higher occupancy and positive re-letting spreads. However, Unibail’s (-5.7%) performance was marred by the announcement of a €520m cost overrun on the development of a mixed-use retail-led development in Hamburg. This is an extraordinarily large figure in the context of the previous cost estimate of €1.6bn for the scheme and begs multiple questions around internal controls within this business.
Meanwhile, those with more challenging financial structures continue to sell assets, with both Balder and Citycon reaffirming their desire to sell assets. Hammerson announced the well flagged sale of its stakes in a number of Value Retail controlled outlet schemes. This concludes the disastrous foray (by previous management) into corporate structures over which they had limited oversight and control. The sale price was at a 24% discount to book value; however, this was expected by the market (given the lack of control in these minority interests), with the NAV correcting from 51p to 39p per share.
Meanwhile, those with more challenging financial structures continue to sell assets, with both Balder and Citycon reaffirming their desire to sell assets. Hammerson announced the well flagged sale of its stakes in a number of Value Retail controlled outlet schemes. This concludes the disastrous foray (by previous management) into corporate structures over which they had limited oversight and control. The sale price was at a 24% discount to book value; however, this was expected by the market (given the lack of control in these minority interests), with the NAV correcting from 51p to 39p per share.
On a more optimistic note, we saw two large capital raises from Unite (£450m) and Merlin (€920m) to fund their respective development programmes. The latter has caught global investors’ imaginations as the raise is to help fund a series of full service datacentres that have seen a surge in demand from artificial intelligence-focused technology businesses. We participated in both raises and the improved balance sheets have seen both names trading ahead of their respective issue prices.
On the last day of the month, the Bank of England cut its base rate from 5.25% to 5.0%. All four major European central banks have now cut rates, and we remain hopeful that they will continue to bring their respective base rates down. This will provide another underpin for our leveraged asset class. The European Public Real Estate Association estimates that 38% of all the debt belonging to European listed property companies will require refinancing between 2026-2028. Lower (than currently expected) refinancing costs will be an important driver of earnings.
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 |
