Indirect investment market: JLL commentary


Average secondary market pricing continued to improve in April, by 0.11%, to an average discount to NAV of just 0.32%, writes Ashley Marks. This was due to strong demand and limited supply in the balanced and industrial sectors, with further improvement expected in valuations. Office funds pricing shifted outward as buyers readjusted their pricing requirements, largely due to structural issues relating to funds affecting demand.


Average pricing moved from a premium of 3% in March to 3.41% in April, largely driven by increasing secondary market demand for Hermes PUT, Lothbury PUT and Henderson UK Property Fund. Deals in Threadneedle Property Unit Trust took place at offer price (5.5% premium to NAV), with buyers reluctant to pay any more.


Pricing improved 0.83%, to a 1.5% premium to NAV in April, driven by increasing demand for AIPUT, at a 2.5% premium to NAV, and Ashtenne, at a small discount to NAV of around 3%. Supply of units in favoured funds, such as L&G IPIF, is scarce and investors continue to seek other opportunities to gain industrial exposure.


Demand for CLOF and WELPUT moved out in April as buyers adjusted their pricing needs.  WELPUT pricing is at a discount to NAV of 3-5%, as buyers consider the impact of restructuring proposals. CLOF buyers are seeking discounts to NAV and sellers a premium, ahead of pending disposals.


Average shopping centre fund pricing moved  from a 1.33% discount to NAV in March to a 1.00% discount in April, driven by the Standard Life Shopping Centre Fund, which saw a deal take place at NAV. Demand is also growing for Henderson Shopping Centre Fund between NAV and a slight discount. Retail warehouse pricing was unchanged at an average discount to NAV of 2.5%.


European investors are looking to raise their UK allocation, while UK investors seek core/prime exposure in Europe. European funds with exposure to main cities with prime to core assets are attracting favourable pricing.