June 2021

By | 19th July 2021

The Trust’s benchmark, FTSE/EPRA Nareit Developed Europe TR in GBP returned precisely 0.0% in the month. On the face of it a dull month but that is far from the reality. The index rose 4.5% to the middle of the month continuing the positive momentum we’ve seen since the end of March. However, from 14th onwards we saw a steady decline erasing all the growth from earlier in the month as investors once again appeared to worry about inflation and rising yields. We remain of the view that real estate and other real assets will be relative outperformers in an inflationary environment as investors seek index-linked income with pro-cyclical growth opportunities.

The Trust’s NAV rose 1.3% in the month driven by strong performance from logistics (pan Europe) and residential (particularly in Germany) whilst the ‘reopening’ trades such as retail and hospitality took a step back as the delta variant increases causing concern in lowly vaccinated countries. After Germany (+2.1%), the strongest performance came from Sweden (+1.3%) and Norway (+1.4%). The latter only has one stock in the index, Entra which remains a takeover candidate given the controlling stakes now held by Castellum and Balder. Castellum (+1.6%) has seen the departure of its well respected CEO and CFO following the anointment of its largest shareholder as the new Chairman. We expect higher leverage through acquisitions and Entra may well be part of that plan. Elsewhere we have seen more M&A activity with Blackstone increasing their bid for St Modwen Properties with a revised offer which values the business at a 21% premium to its net tangible asset value of 463p. Once again private capital is able to look beyond the immediate development pipeline and value the landbank more aggressively than public markets. APG, the Dutch pension giant has announced its intention (alongside Blackstone again) to acquire GCP Student Living. APG an d Blackstone are already co-investors in several UK and European student accommodation funds.

The first 3 months of the year were marked by strong outperformance of the UK versus Continental Europe as investors responded to the impact of the vaccine rollout. The second quarter of the year has seen a reversal of this and June was no exception. Whilst the difference was small (a delta of 1.5%), this was the third month where Continental European property companies (as measured in EUR) outperformed the UK (in GBP). UK names who had performed well in the ‘re-opening’ trade in the first quarter of the year suffered a poor month with London office and retail weak with Derwent London -3.9%, Shaftesbury -8% and Capco -6.7%. Retail names also underperformed with Hammerson -6.8% and New River Retail -11.8%.

The dividend of 9p per share announced on 27th May went ‘ex’ on 17th June and will be paid on 4th August.

The Trust’s AGM will be held on 27th July at 2.30pm at The Royal Automobile Club, we are aware that shareholders may not wish to attend in person and the arrangements for the live webcast of the formal AGM, manager’s presentation and questions and answers remain in place. The webcast will not enable Shareholders to participate in the Meeting or vote, however, shareholders are invited to submit questions to our usual email address (Enquiries@trproperty.co.uk) by 12.00 noon on 26th July 2021. Questions of a very similar nature may be grouped together to ensure the orderly running of the AGM. The link to the live webcast will shortly be published on our website.

Discrete rolling annual performance as at 30.06.2021 (%):

20212020201920182017
Fund23.72-2.442.9114.5014.01
Benchmark18.02-5.95-0.869.6711.51
Share Price37.59-15.510.5527.3924.71

Past performance should not be seen as an indication of future performance