Q1 2023 UK Commercial Property Review

In order to access the website of Winterflood Securities Limited you must first read and accept the following terms:

This website is not directed at, or intended for distribution to or use by, any U.S. citizen, person, or entity that resides in or is located in the United States of America or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation which would subject Winterflood to any registration or licensing requirements with such jurisdiction. Services are not available to U.S. persons except where such services are permitted under SEC rule 15a6 or other relevant exemptions from SEC Broker/Dealer registration requirements.

Please note that Winterflood Securities Limited is not registered as a broker-dealer with the Securities and Exchange Commission and is not a member of Financial Industry Regulatory Authority Inc. (“FINRA”). All research reports provided on this website are being distributed directly by Winterflood Securities Limited to persons in the U.S. that qualify as “major U.S. institutional investors” in compliance with Rule 15a-6(a)(2) of the Securities Exchange Act of 1934. Accordingly, these research reports have not been prepared in compliance with FINRA requirements. Please refer to our Full Disclaimer here.

Research on this Website

Research on this website has been issued for the information of Professional Clients and Eligible Counterparties (as defined in the FCA handbook) of Winterflood Securities Ltd (“Winterflood”). The terminology used within the research reports is intended for professional investors. Research reports are not intended to provide the sole basis for any evaluation of an investment decision.

Each research report on this website must be read in conjunction with any disclaimer which forms part of it. Your attention is drawn to the date of issue of the information provided and of the opinions expressed therein. Any opinions are those of the Winterflood Investment Trust research team and are subject to change without notice and Winterflood is not under any obligation to update or keep current the information contained herein. The material on this website is based on information obtained from sources believed to be reliable but which have not been independently verified and are not guaranteed as being accurate.

Use of Cookies

For information on the cookies used on our websites, please refer to our Cookies Policy which can be accessed here.

Privacy

For information on how we treat your personal data, please refer to our Privacy Notice which can be accessed here.

More information can be found in our Legal Disclaimer

Wide discounts offer value as valuations stabilise

CBRE reports that UK commercial property capital values declined by -0.3% over Q1 2023, which marks a notable improvement from Q4 2022, when capital values fell by -14.6%. Capital growth across the three main sub-sectors was mixed over Q1, with Office (-1.5%) in negative territory, Retail (+0.5%) seeing valuation uplifts and Industrial flat.

Property fund managers generally expect Offices, particularly secondary assets with poor ESG credentials, to continue to underperform as the market adjusts to hybrid working patterns and changing occupier demands. Amongst property investment trusts, Regional REIT has by far the highest UK office exposure, given its stated objective of investing in ‘secondary’ regional offices. Balanced Commercial Property Trust*, Schroder Real Estate Investment Trust and abrdn Property Income Trust* also have reasonably high Office weightings but we find that these assets tend to be high-quality, prime properties instead.

12 investment trusts that invest in UK real estate have announced quarterly NAV updates for Q1 2023. Capital value moves over the period were much more muted than in the previous quarter, with NAV movements ranging from -2.8% (abrdn Property Income Trust*) to +2.3% (Triple Point Social Housing REIT). This contrasts with Q4 2022 when all funds delivered negative capital growth, with the majority seeing double-digit portfolio valuation declines.

*Denotes a corporate broking client of Winterflood Securities

Client log in

Please note that this website is part of Winterflood's research service and therefore only available to MiFID II compliant research clients. For further information please e-mail research@winterflood.com