Pan European real estate equities moved sideways in September returning +0.7% in sterling but completely flat in euro terms. However, the difference in performance between the UK (+2.8%) and Continental Europe (-0.8%) was stark. The UK names had fallen over 10% between the end of June and early September as investors became increasingly nervous about the government’s economic strategy and fiscal position ahead of the Autumn Statement. 10-year gilt yields hit 4.6% on 1st September, but since then we have seen a sharp contrarian recovery with domestically-focused real-estate names seen as a pure way to get UK exposure.
Self storage was the standout sector winner, with Big Yellow (6.8%) taking top prize. The sector has been under pressure given its sensitivity to the wider economy and housing market turnover but with rates and occupancy no longer retreating these names are enjoying a recovery.
Among the best performers in the month was PRS Reit (11.5%), which announced that it had received an acceptable offer from Waypoint on behalf of a number of local authority pension funds for the entire portfolio. Whilst this is well below the last published net asset value (NAV), it follows a fulsome marketing campaign by the board and reflects the discount which the market currently requires for large (over £1bn) portfolios of private rented sector property assets. It is a shame that it wasn’t possible to agree an appropriately priced management structure together with an accurate NAV to give investors’ confidence over the earnings trajectory and the ability to raise capital close to real asset value.
Elsewhere in the UK we saw strong performances from some of the microcap names, Custodian (6.3%) and Picton (5.8%). The latter is a large position for us and we were very pleased to see the sale of their largest asset at a 1% discount to book value and proceeds, net of debt, being used to buy shares back at 23% plus discounts to the asset value per share. This well-run business, with low leverage and fixed-price debt, should continue to buy its own portfolio at these huge discounts generating guaranteed gains (NAV per share) for its owners. Bravo!
We remain overweight long duration, high quality income from healthcare, supermarkets, student accommodation (post the huge price correction in Unite) and social care. The latter is through Social Housing Reit, which is under new management and successfully executing the strategy of rebased rents and new lease lengths. This is an operationally intense sector, requiring collaboration between the local authority funded tenants and the landlord.
As reported previously, debt and credit markets are very healthy. This month saw more evidence of this with Klepierre issuing €500m 12-year green bond at 3.8% and SPS (a Swiss property company) issuing its maiden euro bond of €500m, for six years at 3.125%. Unibail refinanced €685m of hybrid bonds via a perpetual issue (4.75% coupon) reducing its overall hybrid book by €1.5bn. Finally, Warehouses de Pauw had its long-term rating by Moody’s lifted from Baa1 to A3, with the rating agency noting its improved logistics portfolio and strong financial discipline.
The Trust was a net purchaser in the month (£18m) adding mostly to UK names, Primary Health Properties, Big Yellow, Grainger and Tritax Bigbox. The latter was a switch from Segro which is now one of our largest underweights. We also continued to add to Merlin, our Spanish data centre exposure. Sales saw profit taking in Carmila and Sirius with a reduction in Gecina, just bringing down our overall French exposure in the light of heightened political risk and budgetary instability.
September marks the interim point for the Trust and with it an interim valuation of our property portfolio. The Trust changed its independent valuer this year (as reported in the Annual Report) from Knight Frank to JLL in line with best practice. The interim revaluation saw an increase in capital value of 0.9% over the six months. The closeness of valuation between the previous valuer and the new one is clearly reassuring.
During the month we completed the letting to a luxury car-servicing business at one of the recently refurbished units at Ferrier Studios in Wandsworth. They have taken a 10-year lease at a rent equating to £67psf. They were attracted by the quality of refurbishment which is complementary to their business and brand.
The first half of the financial year saw an NAV total return of 10.6%, slightly ahead of the benchmark return of 9.6% and a pleasing share price total return of 12.4%, with the discount tightening slightly in the period.
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 |
