The decline from the middle of April continued until the middle of May, only for the sector (and the wider market) to stage a sharp recovery and end the month positively. The benchmark returned 1.2% but the Trust underperformed managing just 0.6% whilst the share price was just 0.3%. The environment continues to be dominated by global geo-political events. However more locally, the UK added its own politically driven volatility with the risk of a leadership challenge to the Prime Minister increasingly dependent on the outcome of a by-election on 18 June. Over the course of the month the yield on the 10-year gilt reached 5.2% (on 15 May) having been 5.0% at the start of the month. To highlight the volatility, this instrument then ended the month at 4.8%. It is little surprise that the worst performing UK stocks were those seen as most sensitive to base rates and the housing market, namely Big Yellow Self Storage (-7.0%) and Safestore (-4.0%) alongside the newly re-listed Home Reit (-5.6%). Big Yellow reported 2% year-on-year earns per share growth but occupancy was down -1.7% with the outlook continuing to remain uncertain. Shurguard (not owned) returned -3.8% as it saw softer same-store growth and called out both the UK and Belgium as weaker markets.

The most leveraged names in our universe are mostly in Scandinavia and the consequential beta response can be dramatic. This month saw large negative performance from a number of names which fortunately we don’t own namely Citycon (-13.4%), Corem (-13.3%), SBB (-11.5%) and Lumo (-8.2%). The latter was previously called Kojamo and owns apartments primarily in the Greater Helsinki area where there remains an oversupply of apartments. However, Altra (9%), previously called Nyfosa surprised investors with valuation uplifts alongside strong net letting albeit still producing negative like-for-like given the lower quality portfolio ‘tail’.

May saw the results from all of our March year end companies including Landsec (6.0%), British Land (4.7%) and London Metric (0.2%) in the UK. Results were broadly in line with expectations and highlight the solid balance sheet and steady earnings growth of these businesses. The market responded positively to the diversified names which are trading on much wider discounts than London Metric. London Metric recorded 4.2% like-for like income growth but the revised net asset (NAV) was below expectation at 200.6p and this seemed to weigh on the share price. We are more focused on earnings growth and the potential acquisition of nearly half of Picton’s assets would help. That deal is a joint enterprise with SREIT but is so far just a non-binding indicative all-paper offer. The other region which outperformed strongly was Spain with Merlin (3.3%) continuing to respond positively to investor interest in its datacentre development programme.

In Germany we had results from Vonovia (-0.9%), TAG (-1.5%) and LEG (-1.7%) all of which highlighted the difficulty for interest rate-sensitive businesses. Our largest relative overweight is TAG which had rallied 23.3% from the March low point to mid-April only to retreat -11% to the end of May. This pattern was repeated in other German residential names as the macro risk off trade reasserted itself from mid May onwards. TAG remains our largest overweight with its 25% (and growing) exposure to Poland whilst Vonovia, our largest underweight, reported mixed Q1 2026 results reminding investors that it faces earnings challenges if the macro headwinds result in continuation of elevated Bund yields.

As the largest European real-estate company Vonovia is the most liquid way to play sentiment towards a duration-sensitive sector.

European shopping centres continue to be a mainstay of performance with Eurocommercial (4.5%) reporting strong Q1 figures with footfall up 4%. The company reaffirmed guidance given supportive operational momentum. Klepierre (1.6%) reported 2.6% like-for-like rental growth and 4% increase in year-on-year sales, all supportive of their full year guidance.

The Trust will announce its financial year 2026 results and final dividend on 9th June. The full Report & Accounts will be available on www.trproperty.com.

	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