An underwhelming month for real estate equities. The benchmark rose a modest +0.4% whilst STOXX 600 returned +2.7%. The Trust’s performance was a little behind the benchmark at
-0.1% resulting in underperformance of 45bps. This was particularly frustrating as the UK (a collective overweight) outperformed Continental Europe by a huge 550bps. However, the explanation for this is straightforward: the UK winners were primarily focused on Segro (+21.1%), the diversified large caps, Landsec (+7.1%) and British Land (+4.8%) and London office names (GPE +8.1% and Derwent +9.2%). The Trust has very little office exposure not owning GPE or DLN and an underweight position in British Land. The eye-catching performance in Segro (where we are very slightly underweight) was in response to an indicative all-paper bid from Prologis at Segro’s NAV of 925p. The subsequent weakness in the Prologis share price means the bid (based on month-end share prices) has a value of 882p compared to the undisturbed price of 725p. The board of Segro have rejected the approach and promised a response in the second week of July. The area of value dispute is the assessment of the data centre development pipeline primarily situated in the Slough Trading Estate. Prologis argue that they have the greater skill, experience and capital capacity to accelerate the development programme. This will no doubt be seen as the defining corporate battle of 2026, whatever the outcome. Our performance was aided by our large overweight in Tritax Big Box (+7.1%), which rose in sympathy and has a data centre pipeline that is a more meaningful % of assets compared to Segro. This was a key driver in our preference for Tritax over Segro, although we are overweight Logistics/Industrial as a group across the UK and Europe.

The bond market has remained calm as the transition from one Prime Minister runs its course. This aided performance of UK real estate equities in the month, but we believe investors are focused on who will become the next Chancellor.

Other key features in the month were the ongoing buyback programmes across the sector, as companies seek to acquire what they consider to be heavily undervalued equity. Crucially, for the vast majority they are doing this with sale proceeds – ie not increasing leverage. In Sweden numerous companies have accretively bought back their own shares, including Castellum, Balder, Altra and Platzer, while in the UK Unite and Derwent have followed suit. The other ongoing market feature has been the use of scrip dividends. In the month we saw CTP report 51% take-up with shares trading at 24% discount to FY25 NAV and TAG reported 26% take-up at 31% discount. LEG saw 29% take-up increasing their share count by 1.7%.

Debt markets remain fully active and accommodating with numerous companies reporting encouraging refinancing or fresh borrowings. Hammerson issued a €350 million 5-year bond at a 110bps margin (3.8% coupon) while the largest European property company, Vonovia, issued €2 billion across a range of maturities at an average 3.9%. All very encouraging for equity and debt investors alike.

The big news in German residential was the re-listing of ROBYG, the Polish housebuilder owned by TAG. TAG placed 20% of the company alongside a 10% primary raise. The issue price was mid-range and well received. TAG will reinvest the proceeds into standing assets delivering a further improvement in earnings. It remains our largest overweight alongside Phoenix Spree Deutschland, which confirmed its first return of capital and retirement of 7.5% of the equity. This is a crucial milestone in the winding down process.

A flurry of hiring announcements completed a busy month with British Land appointing Jo McNamara from Oxford Properties as CEO, while Derwent London surprised the market appointing Jonathan Murphy as CEO. He had been Assura’s CEO prior to the takeover by PHP and adds his name to the growing list of CEOs with a finance rather than real estate background.

	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