UK market overview
The Jones Lang LaSalle Balanced Fund Index again rose marginally this month, by just 0.11%, resulting in a -3.40% 12-month return, writes Ashley Marks. This improves slightly to -3.36% when secondary market pricing is considered over the same period.
Secondary market pricing for balanced funds improved again in May, at 0.43% above April’s overall pricing. Threadneedle PUT and UBS Triton were the most signiﬁcant contributors to the rise; pricing for both funds improved by around 1%.
A return to favour of more secondary, high-yielding assets has seen demand for TPUT steadily increase in the past few months and the rumoured new equity being injected into Triton, plus the substantial writedown in value it experienced last year, have quelled the secondary market sales appetite of redeeming existing investors.
Other balanced funds’ pricing remained fairly unchanged in May, transacting between bid and offer price on the whole.
Pricing has improved marginally across the retail sector, although the majority of funds remained largely static. The only real movement in the shopping centre subsector was in the Lend Lease Retail Partnership, where indicative pricing moved in to around net asset value -7%, having previously been transacting at around net asset value -8%. Pricing for Henderson’s and Standard Life’s funds remain at a similar level of 6-8% discounts to NAV.
In the retail warehouse subsector, pricing for Hercules stabilised, with a handful of relatively sizeable deals occurring at around a 9% discount to NAV. Pricing for Henderson’s retail warehouse fund is at more or less the same level as for Hercules. The Standard Life Retail Park Fund remains at around a 7-8% discount to NAV.
There was no real movement for most funds in this sector last month. Legal & General’s IPIF and SWIP AIPUT were still the most sought after, with pricing at small discounts to NAV. The merger with Falcon does not seem to have had an impact on IPIF’s secondary market pricing.
The most signiﬁcant movement in pricing was the improvement in Ashtenne to around -40%, which, although still a signiﬁcant discount, had an impact on overall pricing.
Pricing for this sector remained stable in May, with both Henderson’s Central London Ofﬁce Fund and WELPUT remaining at a 3-4% discount to NAV, WELPUT being the more sought after of the two at present.
Extension proposals for Henderson’s fund are understood to not yet have been ﬁnalised; until these changes are made clearer, we do not expect pricing to improve for the fund on the secondary market.
Pricing for Unite UK Student Accommodation Fund has moved out slightly but is still at low single digit discounts to NAV, despite the manager raising equity on the primary market. Pricing for L&G’s Leisure Fund remains at around a 2% premium to NAV, following the oversubscribed equity raising recently completed by the fund manager.