Whilst pan European property shares fell modestly over the month (-0.2%) it was (in GBP terms) a game of two halves. From the beginning of the month to the mid point (14th) the sector and the broader equity market rose strongly on the back of the ECB’s announcement of the offer of unlimited (but conditional) bond buying – the so called Outright Monetary Transactions – to any Eurozone sovereign which requests it. Alongside the improvement in equity markets, EUR also strengthened 2.1% against GBP in those first two weeks as investors took comfort from this commitment by the central bank. However, whilst this strategy is to be welcomed it doesn’t solve the core issue of whether debtor nations within the single currency will continue imposing the austerity requirements and whether the creditor nations will accept larger write downs. The second half of the month saw concerns remerge coupled with global markets also rolling off their September 14th highs. The US electioneering is also well underway and concerns around the impact of the ‘fiscal cliff’ and a political impasse also began to weigh on markets.
At the country level, it was the peripheral nations which outperformed with the Italian property companies up +10.2%. The Fund holds both Beni Stabili and IGD. Norway’s single stock, Norwegian Property, also performed well rising +4.5% whilst the remainder of Europe saw modest movement of -1% to +1.7%. Once again it was the macro considerations which drove the market. At the individual company level we saw further evidence of successful capital raising both equity (Capital & Counties) and debt (convertibles from British Land and Capital Shopping Centres). Interestingly smaller companies were also able to tap the retail bond market with Workspace raising £57m and CLS £75m such is the demand for income.
The interim property revaluation produced an uplift of £0.47m at the month end. The six month NAV with income increase was therefore 4.9% and the share class outperformed its benchmark in the first half by 160bps.
On 26th September, the Board of TRPIT announced a proposal to convert Sigma shares into Ordinary shares. This will create a larger, more liquid Investment Trust with a single share class. The offer reflects a discount to Sigma’s net asset value after costs and the Board recommends that holders of both share classes vote in favour at the EGM which will be held in December. Any investor requiring more information please contact their TRC sales contact or the Trust’s management team directly.