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It shows the average discount to net asset value of the UK’s real estate investment trusts — listed companies that own, develop and manage commercial property.

The discount — or, on rare occasions, premium — to the valuation of a trust’s assets reflects investors’ views of the company’s prospects.

In 2003, after the dotcom bubble burst, property companies hit a low point with discounts below 40 per cent; they then rose to a peak shortly before the January 2007 introduction of real estate investment trust status, which allows companies an exemption from corporation tax on profits they make from charging rents to tenants. From there, pricing plunged again in 2009 after the credit crunch.

In February this year, real estate investment trusts hit a discount of about 20 per cent to net asset value, their lowest point in five years. Trusts such as Land Securities and British Land, the country’s two largest property companies, still trade at double-digit discounts.

Why is that?

Investors are worried about what Mike Prew, equity analyst at Jefferies, calls a “post-Brexit dysfunctional real estate market”. Mr Prew warns that a UK vote on June 23 to leave the European Union would lead to a “multiyear demand shock” in the property market, especially in London offices.

There are a range of views on the exact impact of a Brexit, but most researchers agree that a vote to leave would result at least in a short-term market drop. S&P, the rating agency, says a vote to leave would “potentially reverse gains in property asset values seen over recent years”.

Worries over Brexit have diminished a little in recent weeks as polls appeared to suggest a shift towards a Remain vote, while bookmakers cut the odds on the UK staying in the EU.

This has reassured investors somewhat, but analysts at Green Street Advisors, a research firm, caution that “the volatility of bookie odds may increase if polls continue to show a close finish”.

So if the UK votes to remain, everything will be fine?

Not necessarily. The UK’s commercial property market, especially for London offices, has seen three years of rapid growth in capital values. Prospects for such growth are now moderating, according to David Brockton, analyst at Liberum.

Meanwhile John Lutzius, managing director at Green Street, points out that according to his company’s measures, New York City real estate is trading at a greater discount to net asset value than London’s, suggesting that pricing reflects the broader direction of the property cycle and not just Brexit risk.

“There’s a feeling of a slowdown in London and you can see a bigger feeling of slowdown in New York as well,” he says.

Trading of big UK commercial buildings has slowed sharply in the run-up to the referendum, adding to market uncertainty, since there are fewer transactions to indicate current pricing levels.

So where to from here?

If the UK does leave the EU, the investment landscape will look very different. But if the vote is to stay, there may be a pent-up flurry of office moves and commercial property sales that will return the property market to something more like business as usual.

In the longer term, though, it will be affected by trends including slowing economic growth, more London office space being built — which should eventually tilt the balance of power away from landlords and towards tenants — and the shifting patterns of how consumers shop.

Potential investors must decide whether the current discounts represent a buying opportunity or, in the light of all these trends, simply an accurate reflection of the risks ahead.

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