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Fund Profile

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This is a non-independent marketing communication commissioned by Columbia Threadneedle Investments. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
TRY: a unique way to capture a recovery in property valuations...
Overview

TR Property Investment Trust (LON:TRY) is a unique investment trust, giving investors exposure to pan-European property markets, via a portfolio of predominantly listed property securities and REITs, together with a limited exposure to direct UK property (c. 8% of net assets). The trust is managed by an experienced team led by Marcus Phayre-Mudge, who has been part of the TRY management team since 1997.

As we discuss in the Performance section, over the long term, pan-European property shares as a sector have outperformed equities generally, and TRY has a good track record of outperforming this sector. More recently, in 2022, TRY and its portfolio saw a decline in value of over 30%, in line with its benchmark, with rising interest rates being the predominant factor in this decline.

TRY’s current dividend yield is c. 5.1% and there is a long history of maintaining or increasing the dividend, as we discuss in the Dividend section. The yield is typically lower than direct property trusts, whose primary objective is normally income, whereas TRY is focussed on both income and growth, and dividend growth of 8% annualised over the last ten years is well ahead of inflation over that period.

TRY’s long-term average gearing is c. 15%, and after a period of lower gearing in response to market conditions, its current gearing is in line with this. TRY uses a mixture of short- and long-term debt drawn in both sterling and euros.

TRY’s discount is currently c. 9%, wider than its five-year average, but narrower than the c. 30% discount which direct property trusts currently average. In the Discount section we argue that TRY’s relatively narrow discount is a reflection of its shareholders’ understanding that the underlying assets are trading at significant discounts.

Analyst's View

In the Performance section we provide a brief reminder that pan-European property shares have outperformed general equities over the long term; important to remember given more recent events which have left property shares trading at very low valuations. M&A provides the empirical evidence that if stock market investors don’t care, others do, and are buying up assets. In the Portfolio section we discuss some of the M&A in TRY’s portfolio, which is an increasingly long list.

The TRY team have a bird’s eye view of the asset class and thus are able to navigate strategic changes such as we are seeing now, as well as more tactical opportunities. A portfolio of equities in property companies is potentially subject to bigger swings in its own net asset value than those of its underlying holdings, and this was certainly true for TRY in 2022. On top of the enduring case in favour of TRY, which gives investors access to an expert manager in a specialist field, this large swing represents the more tactical opportunity that TRY’s portfolio is trading at much lower valuations than just two years ago, but in contrast, underlying companies are performing well. Given the stage in the cycle, with TRY’s own 9% discount on top of the very low valuations of the underlying, TRY should be of interest not only to generalist investors seeking a specialist manager in property but also to property specialists seeking a unique recovery play.

Bull

  • A straightforward and relatively low-cost one-stop shop for property investing
  • Experienced management team has successfully managed TRY through cyclical downturns before
  • Long-term dividend growth is ahead of inflation

Bear

  • European property values could fall further in 2023
  • TRY uses gearing, which in the above scenario could amplify losses
  • Initial dividend yield is lower than for direct property investment trusts
Continue to Portfolio
2024 Kepler Income & Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for income & growth... Find out more

Fund History

17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
10 Aug 2023 Fund Analysis
TRY: a unique way to capture a recovery in property valuations...
21 Jun 2023 Ça plane pour moi
Some of the world's biggest companies are doing just fine in Europe, yet investors shun the region. Time for a rethink...
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
08 Dec 2022 Fund Analysis
TRY: global debt re-pricing creates opportunities in pan-European property markets...
07 Dec 2022 What’s that coming over the hill?
Is it a monster, or a debt refinancing anniversary? Our analysis of the property sector shows chunky discounts across the board are there for good reason…
27 Jul 2022 Fund Analysis
TRY’s index-linked revenues could be appealing in the current inflationary environment…
08 Jun 2022 Safe as warehouses
We look into the attractions of the often-overlooked commercial property sector…
05 Jan 2022 Kepler’s top-rated trusts for 2022
We unveil the winners of our ratings for 2022 in the Growth, Income & Growth and Alternative Income categories…
27 Oct 2021 Fund Analysis
TRY has a number of key advantages over a direct physical property trust…
21 Apr 2021 Fund Analysis
TRY offers a diversified and flexible way to invest in property, via listed equities…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
22 Oct 2020 Fund Analysis
TRY offers a yield of almost 4% backed over 100% by reserves…
20 Nov 2019 Making the grade: Kepler's rated trusts report strong performance in 2019
Earlier this year, we launched our new ratings for income and growth. Since then, the 40 trusts to have been awarded the elite Kepler Trust Intelligence ratings have performed strongly…
18 Oct 2019 Fund Analysis
Specialist property trust, which has consistently outperformed its benchmark…
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