Jones Lang LaSalle market commentary
UK market overview
The Jones Lang LaSalle Balanced Fund Index fell 0.77% in February, resulting in a -4.65% 12-month return, falling to -7.8% including secondary market pricing, writes Ashley Marks.
Pricing improved slightly in February. For most of last year, Blackrock’s UKPF traded at a discount to net asset value, moving close to bid price towards the end of the year. But this year a large volume of investors have sold units on the secondary market at NAV.
Hermes PUT’s pricing also rose, from around a 1.5% to a 2.5% premium to NAV,with many deals at this level. Pricing for most other balanced funds remained stable.
Pricing was relatively flat across the sector, but there were shifts in two funds, by around 0.75%. Henderson’s shopping centre fund’s pricing improved to around a 7% discount, perhaps in response to a market expectation that the Future Fund’s stake in the Bullring(which HSCF also owns part of ) will be sold at above NAV. Standard Life Shopping Centre Trust’s pricing fell to around a 7% discount.
Lend Lease Retail Partnership’s pricing remains at around an 8% discount to NAV.
Retail warehouse fund pricing was also relatively flat, with concern over tenant risk. Henderson Retail Warehouse Fund and Hercules Unit Trust remained at a 10-12% discount, the former attracting the slightly better pricing. Standard Life Retail Park Trust, ungeared but with greater exposure to tenants in administration, also remained at around an 8% discount to NAV.
Pricing held firm in February, with SWIP AIPUT and L&G IPIF still attracting the most interest. SWIP AIPUT units are elusive, with plenty of potential buyers between NAV and a 2% discount, but few vendors, owing to the fund’s prime nature and solid distributions.
L&G IPIF pricing remained at a 6-7% discount to NAV, but the imminent unwinding of a swap should boost pricing. Pricing in Ashtenne remained at around a 50% discount to NAV. The market for The Industrial Trust and Falcon remains inactive.
Only Henderson Central London Office Fund and WELPUT are attracting any real interest. The postponement of the launch of WELPIC, a listed vehicle to invest in WELPUT units, does not seem to have altered investors’ pricing expectations, with most seeking NAV or better, given the forecast performance.
Some are seeking to sell in the medium term but are willing to wait for the liquidity window in 2014, unless they see compelling pricing, although a few units are available at around 2-3% discounts.
Trading in HCLOF should improve after investors vote on plans for its extension, which are becoming clearer, in summer. Its pricing stands at around a 3-5% discount.
APIA is attracting buyers at around a 50% discount to NAV.
Unite UK Student Accommodation Fund pricing is still at around 1-1.5% discounts, but there are concerns for the sub sector’s performance, particularly since competitor Opal Group went into administration.
L&G’s Leisure fund is attracting interest at small premiums to NAV, given its impending equity raising, but vendors remain scarce.
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