Real estate investment trusts’ (Reits) net asset values plunged in the second half of 2022 as valuers factored in higher interest rates – but their shares continue to trade on sizeable discounts to those values, suggesting opportunities for the brave. According to Investors’ Chronicle analysis, the Reits that have posted valuation updates so far this year recorded an average drop of 13.9 per cent for the six months to the end of 2022. The bulk of this decline occurred in the final quarter, when values slid by 11 per cent.
Their collective slump is also reflected in the wider market. MSCI’s UK index, which records valuation changes for directly held property investments, posted a 12.8 per cent drop for the final quarter, the worst quarterly performance since 2008. But Reits continue to trade at an average discount to net asset value (NAV) of 16.4 per cent, a slight improvement from the end of last year but still below historical levels.
| REIT VALUATION CHANGES POSTED IN JANUARY | |||
| Company name | Net asset value (NAV) change, six months to 30 December (%) | NAV change, three months to 30 December (%) | Premium/discount to NAV (%)* |
| FTSE 250 | |||
| Tritax Big Box** | -25.4 | No valuation update | -12.6 |
| Assura*** | No valuation update | -11 | 2 |
| Shaftesbury**** | No valuation update | -2.7 | Not applicable |
| Capital & Counties**** | -4.1 | -2.4 | Not applicable |
| UK Commercial Property Reit | -29.4 | -21.5 | -27.3 |
| Balanced Commercial Property Trust | -20.3 | -15.1 | -28.4 |
| Target Healthcare Reit*** | -8.28 | -8.1 | -19 |
| Non-FTSE 350 | |||
| PRS Reit | 0.6 | No valuation update | -19.9 |
| Impact Healthcare Reit | -5.17 | -5.5 | -5.6 |
| Picton Reit | -16.8 | -12.4 | -22.3 |
| Custodian Reit | -18.3 | -12.2 | -9.3 |
| Schroder Reit | -22 | -17.1 | -21.8 |
| Phoenix Spree Deutschland****^ | -5.2 | No valuation update | Not applicable |
| Alternative Income Reit | -12.6 | -13 | -16.6 |
| Average | -13.9 | -11.0 | -16.4 |
| *Calculated on 08/02 **Estimate based on guidance ***Net tangible assets (NTA) ****Change in wholly-owned portfolio value ^Not a Reit | |||