Real estate share price risers and fallers in June were heavily influenced by M&A announcements, which continue to dominate the listed property landscape following four years that has seen the sector halve in number. Overall, the sector was up 1.5% on average in June and was up 4.5% in the quarter. The war in Iran hit real estate share prices hard earlier in the year on concerns over inflation and interest rate outlooks, with the sector down 5.4% over the first six months of the year.
Best performers in price terms
| (%) | |
| SEGRO | 21.1 |
| Derwent London | 9.2 |
| Big Yellow Group | 7.6 |
| Grainger | 7.3 |
| Schroder European REIT | 7.3 |
| Hammerson | 7.3 |
| Tritax Big Box REIT | 7.1 |
| Great Portland Estates | 6.3 |
| Supermarket Income REIT | 5.4 |
| Residential Secure Income | 5.3 |
Source: Bloomberg, Marten & Co
The largest UK REIT by some distance, SEGRO (SGRO), has caught the attention of US logistics giant Prologis, which made public a share-for-share proposal that was “unequivocally” knocked back by SGRO’s board. SGRO’s share price soared over 20% following the announcement and demonstrated just how cheaply the market had been valuing the business. Fellow logistics player Tritax Big Box REIT (BBOX) had a busy month, making significant progress on its data centre development pipeline and disposing of £200m of non-core assets. Build-to-rent landlord Grainger (GRI) is the latest subject of US activist Saba, which has now built up a 6.3% interest in the company, which may precipitate an eventual wind-down of the company – much like Saba’s ongoing campaign at Workspace (WKP). Schroder European REIT’s (SERE) share price rose on news that it was pursuing a managed wind-down having been trading at a persistently wide discount to NAV. Meanwhile, Residential Secure Income (RESI) made considerable progress in its own wind-down with the sale of its retirement living portfolio.
Worst performers in price terms
| (%) | |
| Ground Rents Income Fund | (5.5) |
| CLS Holdings | (5.0) |
| Safestore Holdings | (4.5) |
| Alternative Income REIT | (4.2) |
| Schroder REIT | (3.5) |
| Picton Property | (3.1) |
| Phoenix Spree Deutschland | (2.3) |
| International Workplace Group | (2.2) |
| Harworth Group | (2.0) |
| Henry Boot | (1.8) |
Source: Bloomberg, Marten & Co
Ground Rents Income Fund’s (GRIO) wind-down continues to go from bad to worse, with the value of the company’s portfolio taking another substantial haircut due to the impact of the government’s leasehold reforms. The potential capital return to shareholders has further diminished after the company report a NAV drop of more than 40%. Alternative Income REIT’s (AIRE) shares slipped back after the offer for the company from its largest shareholder, Glenstone REIT, came in disappointingly low. Share price weakness at Schroder REIT (SREI) negatively impacted the proposed offer price that it and consortium partner LondonMetric (LMP) has lodged for Picton Property (PCTN).
Valuation moves
| Company | Sector | NAV move (%) | Period | Comments |
| Safestore Holdings | Self-storage | (0.8) | Half-year to 31 March | Investment property valuation of £3.5bn. Revenue per sq ft was up 5.0% over period |
| Schroder European REIT | Europe | (1.9) | Half-year to 31 March | Property portfolio valuation declined by 1.1% to €192.6m |
| Residential Secure Income | Residential | (3.3) | Half-year to 31 March | Portfolio value down 1.8% as company nears end of managed wind-down |
| Ground Rents Income Fund | Residential | (41.4) | Half-year to 31 March | Fall driven by impact of the draft Commonhold and Leasehold Reform Bill |
| Sirius Real Estate | Europe | 5.0 | Full year to 31 March | Portfolio of German and UK industrial/business parks now valued at just under €3bn |
| Custodian Property Income REIT | Diversified | 3.7 | Full year to 31 March | Portfolio valuation increased by 2.7% on a like-for-like basis to £669.3m |
| NewRiver REIT | Retail | 2.9 | Full year to 31 March | Like-for-like portfolio valuation growth of 0.7% to £802.2m |
| Picton Property | Diversified | 2.2 | Full year to 31 March | Like-for-like increase in property valuation of 1.7% to £701m |
| AEW UK REIT | Diversified | (1.4) | Full year to 31 March | Portfolio valuation stable and now worth £215.5m |
| Workspace Group | Offices | (11.2) | Full year to 31 March | Portfolio valuation down 7.0% to £2.1bn |
Source: Marten & Co
