A broadly sideways move for pan European real estate equities with the benchmark and net asset value (NAV) total return exactly the same (0.6%). The sector marginally underperformed the broader STOXX 600 which returned 1.0%. However, the modest move belies a huge amount of corporate noise with plenty of interim and third-quarter datapoints.

Investors focused on the UK spent much of the month waiting for the Budget on 26 November. In the end there was very little impact for either commercial or residential property, bar an additional property levy (on high value residential; over £2m capital value) which won’t impact until 2028. The low growth in UK residential was reflected in Grainger’s NAV increase of 0.8% even with full occupancy and some rental growth. The share price has fallen 15% this year as investors focus on its deleveraging and low earnings yield. The only other listed UK residential business is PRS Reit which is in the midst of being taken private at 115p versus an NAV of over 140p. The difference largely being the discount for quantum. It is unfortunate that the board didn’t see fit to highlight that the valuation was on a unit-by-unit basis rather than a block. As professional investors we were well aware of the potential discount, but we question whether private investors may have put more emphasis on the ‘published’ figure. The loss of the only listed single-family housing REIT is disappointing but the terms of the external management contract were well ahead of market rates and the contract was egregiously extended by the previous board. This governance failure led to activism from shareholders and ultimately the privatisation. Our residential exposure is primarily through Germany and Ireland. Irish Residential (4.2%) posted solid results but the real driver is an expectation that the Irish government will enact proposed changes to rent control regulations, improving the company’s profitability and increasing development within the subsector.

The top performing sector was healthcare where the (soon to be) merged entities of Cofinimmo and Aedifica returned 5.5% and 5.1% respectively. Aedifica (the acquiror) raised its 2025 financial-year guidance alongside receiving approval for the merger, both factors driving share prices. The only live potential M&A situation involves Big Yellow Self Storage (4.3%) which has received unsolicited interest from Blackstone. The ‘put-up or shut-up’ deadline runs until 8 December but there has been recent speculation in the press that Blackstone are preparing to walk away from discussions. Safestore (+3.7%) has been a beneficiary of the read across invaluations. With the Budget out the way and no additional impediments to residential sales, we expect elevated transactions from volumes deferred ahead of the Budget. If Blackstone walks away we would expect prices to correct 10%. London Metric (0.6%) announced that it has increased its ownership of Schroder REIT to 11%. The externally managed REIT has been without a de-facto CEO since the previous fund manager was promoted to global head of real estate at Schroders earlier in the year. LondonMetric’s loan-to-value is back up to 35% following payment of the £205m cash component of the Urban Logistics REIT cash-and-paper transaction.

London offices remain in the spotlight with evidence of strong rental growth in ultra-prime space. However, poor assets or non-prime locations continue to see weaker occupancy. GPE saw vacancy creep up to 6.7% whilst Workspace (-8.7%) reported further operational weakness. The new CEO is taking appropriate action with further sales evidenced alongside cost savings, but vacancy rates remains stubbornly high preventing any near-term like-for-like revenue growth.

The other UK weak performer was Unite ( -6.9%) which announced a profit warning days after shareholders of Empiric Student Property voted to be acquired by Unite. We struggled to see any merit in the acquisition and sold 50% of our overweight position at 850p. However, the corporate transaction was overshadowed by the complete failure of management to judge weakening occupancy across the Unite portfolio. We sold out of the remaining overweight in the month with the stock ending November at 528p. However, the implied yield of the portfolio at the current share price is now over 7.5% and therefore the stock is now a neutral on valuation grounds.

The interim results were published on 1st December alongside the interim dividend of 5.75p (1.8% increase on the same period last year). The full report is available on our website (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