March started poorly for pan European real estate equities with a -5.3% fall in the first week followed by a steady climb back over the rest of the month. However, the benchmark return was still negative at -2.2%. The Trust’s net asset value (NAV) return fell slightly less at -1.9%. March is the Trust’s financial year-end and the 12-month total return was -2.6%, ahead of the benchmark return of -3.9%. The huge number of important geopolitical events seen in the last 12 months has been reflected in the rollercoaster of returns in the period. Peak-to-trough in the sector since March 2024 was over 17%, with the sector peaking in September after a long summer rally based on optimism that inflation was broadly under control and the interest rate cycle would continue to see cuts to short term base rates and renewed stability in the long end.
Returning to the month under review, performance was dominated by the weakness of German residential businesses which collectively returned -15.6%. These names – with their very stable earnings – are often viewed as bund proxies. The announcement of the ‘fiscal bazooka’ whilst welcomed by all market observers looking for stimulation of the German economy, saw the 10-year bund yield rise from 2.4% to 2.9% in the first 2 weeks of March which impacted share prices of these names. The one exception was Phoenix Spree Deutschland (our largest overweight position) which is a special situation, having announced plans to liquidate the portfolio over several years. The stock was virtually flat over the month.
Swedish property companies were also weak, collectively falling -9.3% (in SEK) reflecting their higher leverage and shorter-dated debt which leads to greater risk and volatility in their earnings.
The strongest performance came from the UK (+1.1%), which was buoyed by a variety of potential M&A activity. In the case of Assura (+13.1%) the board had rejected an earlier bid from KKR as ‘materially undervalued’. Following consultation with shareholders they are now ‘minded to recommend’ a bid which was just 2% higher than the previous bid but crucially now matching the last published NAV. Elsewhere, the board of Warehouse Reit (+31.5%) confirmed that it would be minded to recommend a revised offer which is at c.10% discount to the last published NAV. The Put Up or Shut Up (PUSU) timer will run to 28th April. Urban Logistics Reit (+12.5%) received a requisition for an EGM which includes resolutions to replace the Chairman and other directors. This requisition was supported by the Trust in response to dismally poor governance by the board, who had recommended that shareholders agree to a value-destroying internalisation of the management contract. We expect the board to respond ahead of the EGM, but clearly investors have taken this positively given the share price response. Finally, Impact Healthcare, now known as Care Reit (+38.4%), received an agreed cash takeover bid from a US healthcare Reit, CareTrust. Whilst all of this activity is encouraging, with the exception of Assura (market cap (£1.5bn) the remaining names are all sub £500m market cap companies. We continue to believe that there are significant economies of scale to be reaped from amalgamating the majority of the remaining diversified UK micro-cap listed property companies.
The direct property portfolio is revalued twice a year. As at 31st March, the independent valuation was £61.75m which reflects a net increase in capital value of 3.5% over the last 6 months. This figure includes the two new purchases at Bicester and Northampton (combined £19.3m). We also completed phase 2 (3 units) of the ongoing refurbishment at our 16-unit Ferrier Street Industrial Estate, creating ultra-urban industrial space with the highest sustainability credentials. Having pre-let the first phase (2 units), we are in dialogue with a range of potential tenants for phase 2.
Given that this commentary is published in early April, it is clear that all this information now looks very historic. Post the tariff announcements (aka ‘Liberation Day’) the only short-term certainty is higher volatility. We continue to focus on high-quality businesses with strong balance sheets. It is interesting to note that on 9 April the KKR consortium confirmed their revised bid for the primary healthcare REIT, Assura. The board have recommended the bid. Whilst we don’t want to see the private equity industry privatising listed property companies it is, on one level, encouraging to see a transaction not derailed by macro-events.
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 |
