November 2017

By | 22nd December 2017

Pan European property equities in GBP rose a modest 1.1% in November with the UK a weak performer (-0.1%) again (the UK returned -0.2% in October). The strongest performance came from Germany, Italy and Norway.

The latter has only a single stock, Entra which performed well following its Q3 results which pointed to ongoing strength in the Oslo office market as well as a more positive outlook for the Norwegian economy as the oil price continues to rise. Italian stocks performed well again (after 3.5% growth in October) as IGD and Beni Stabili continued to benefit from the expectation that listed property companies would be eligible for the Italian equivalent of ISAs (PIRs). IGD rose 8.5% in the month.

Germany was the strongest performer as all (bar one) of its commercial and residential companies rose in value in the month. The strongest performers were the smaller companies such as DIC Asset (+6.9%) and Hamborner (5.9%) but Vovonia, the largest residential name rose 4.7%. With concerns over the ability of Ms Merkel to form a new coalition came renewed risk aversion and the yield on the benchmark 10yr Bund dropped in the month. Given the ongoing correlation between the residential companies pricing and the Bund yield this move downwards was helpful.

The Trust’s NAV rose 1.35% in November, a little ahead of the benchmark. This was assisted by our position in Axiare (+14%) which rose following an agreed bid from Colonial (-2.8%) where we had a zero holding ahead of the announcement. Given that the cash offer of €18.50 per share will not be paid until the end of Q1 2018 we have liquidated our overweight in Axiare and closed the underweight in Colonial. Self storage in the UK was a strong performer with excellent interim results from Big Yellow (+7.2%) which has reduced the underperformance this year versus Safestore (+4.5% in November). The Trust holds both names.

UK retail was again a poor performer with Intu (-9%) the weakest stock in the benchmark in November. Whilst we have no holding in Intu or Hammerson (-0.9%), our positions in Capital & Regional (-6.4%) and New River Retail (-4.8%) suffered even with strong interim results from New River Retail including a success move from secured to unsecured financing and a drop in their cost of debt to less than 3% following investment of the new capital. Our focus remains on the convenience and community-led retail exposure rather than prime retail which we believe is overvalued given how little rental growth is forecast. Our European retail exposure fared better with Mercialys (+5.4%) and Eurocommercial (+5.3%) going ex div in the month.

The Trust published its Interim results (for the six months to 30th September) on 23rd November and the Board announced the interim dividend of 4.65p (13% ahead of last year’s interim dividend). The results include a comprehensive update on the portfolio, positioning and outlook and is available at

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