The property downturn has been rough for both real estate investment trusts (Reits) and listed housebuilders. Higher interest rates shrinking both commercial and residential property buyers’ budgets means transaction volumes have dropped and the scant deals that are happening are at sizable discounts to 2022’s prices.
- Unique self-funded model
- Diversified income stream
- Discount to NAV
- Low gearing
- No Reit tax savings
- Cost of land could fall
But while we think investors need to remain cautious on the outlook for the two sub-sectors, there is one property firm whose straddling of both looks like an advantage. Harworth Group (HWG) is neither a housebuilder nor a Reit. Rather, its business model – focused on land regeneration opportunities across the Midlands, Yorkshire and North West England – sees it both owning and developing warehouse assets alongside selling land to housebuilders.