Schroder European Real Estate (SERE), the £85m commercial property investment trust drawing up plans for a managed wind-down, saw its portfolio fall 3.9% in the three months to 30 June. 

Weaker investment demand for secondary offices and heightened economic uncertainty alongside concerns over rising inflation and interest rates knocked €7.5m off the valuation, the real estate investment trust (REIT) said.

Rises in discount rates to reflect weakening market conditions contributed to declines across the portfolio managed by Schroders’ Jeff O’Dwyer. 

The biggest fall of €3.9m, or 11%, at its St Cloud office in Paris followed recent transactions in the area and showed the “increasingly polarised nature of office markets”.

Offices in Hamburg and Stuttgart and an industrial park in Rennes fell by 4.5% to 4.2%, while an industrial estate in Rumilly was marked down by €600,000, or 4.7%, in response to higher spending to improve the asset’s sustainability credentials. 

The mixed-use data centre in Apeldoorn slipped a further 3.7%, or €400,000, following tenant KPN’s decision to leave the property. SERE said the decrease was solely attributable to the shortening of the remaining lease.

The company ended last week with its shares 34% below net asset value and on a yield of 7.9%. This morning the shares firmed 0.6% to 65.6p. Including quarterly dividends, the shares have left shareholders with a small loss of 1.2% over five years. 

Last month O’Dwyer said Schroders had advised the SERE board that a managed wind-down over two-to-three years was the best way to maximise shareholder value.

Stay a step ahead. Our daily newsletter brings you the latest on investment trusts and active ETFs. Subscribe here.