Real Estate Capital UK commentary
Central London continues to outperform the rest of the UK, with CBRE’s April index showing offices produced 0.4% capital growth and 0.5% rental growth, against 0.1% and no increase respectively for all property. Investors are focusing on big UK REITs with heavy London exposure. Great Portland, British Land, Derwent London and Shaftesbury had the top returns.
REIT share prices out-performed in April, gaining 4.6% as the wider equities market flat-lined. So far this year (to the end of April), the FTSE/NAREIT UK index has risen 10.3%, buoyed by low interest rates and the idea that real estate provides a partial hedge against inflation.
With low discounts or premiums on property shares, companies are coming to the market for capital. On April 13, Hansteen announced a £150m placing and open offer at 81p a share, a discount of 4.9%, while non-REIT Capital & Counties raised £100.6m to expand and improve its London holdings in Covent Garden. Great Portland is planning a seven and 10-year dollar bond issue to raise $258m (£160m), to diversify its debt.