Fund Profile

Disclaimer

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 makes investing in real estate simple…
Overview

TR Property (TRY) is a FTSE 250 investment trust with a portfolio of pan-European REITs, together with some exposure to UK direct property. Having recently disposed of its largest direct property asset, TRY has recycled the profits into listed property securities, reflecting the relative valuation attractions of listed securities trading at wide discounts.

Investing in listed property has been difficult in the last two or three years, but over five years TRY has maintained its track record of outperformance, with a broadly flat NAV total return compared to -13.0% for the FTSE EPRA Nareit Developed Europe Index. Longer term TRY's Performance has outpaced wider equity markets as well as the real estate sector. The trust's Management team is led by manager Marcus Phayre-Mudge, who has been involved with TRY since 1997, working within Thames River Capital, which operates in a JV with Columbia Threadneedle, giving the team access to the group's wider resources.

TRY’s current Dividend yield is c. 4.9%. This is lower than for direct property trusts, but TRY has, over the long term, grown its dividend ahead of inflation. After exceptional earnings in 2022–3 the board guided investors to expect lower earnings for the year ending 31/03/2024, which proved correct. Revenue reserves were used to make a small increase to the dividend, the 14th consecutive year of increases.

TRY is currently geared c. 11%, within its expected range of 10–20%, using a mixture of long- and short-term debt and CFDs.

Throughout the cycle of rising interest rates, TRY has maintained an average discount of less than 10% and is currently trading at c. 9%. While TRY has no directly comparable peers, the Morningstar UK Commercial Property peer group provides some helpful context, discussed in the Discount section, and currently has an average discount of 21%.

TRY has a Kepler Income and Growth rating.

Analyst's View

Large discounts to net asset value on underlying assets? Tick. Mergers and acquisitions? Tick. Interest rate cycle turning? A cautious tick, as although the ECB has made the first move, plenty of caveats surrounded it. These are the main factors that make for a value opportunity in REITs and the first two have quite firm ticks against them now. The last one gets a partial tick and while yes, there is a host of other things to think about in real estate, when you boil it down, this is the big swing factor. Let's not forget also that interest rate cuts are often a result of softening economic growth, and so it can take time for the positive impact to filter through.

Here's the thing, though. TRY's universe of stocks are, of course, listed equities just like any other and thus are in the benchmarks used by generalist equity fund managers. REITs are only a small component of large-cap benchmarks and thus are relatively easy for large-cap managers to ignore at any point in the cycle, but particularly when things look uncertain macro-wise. However, REITs are a much larger proportion of small-cap benchmarks and so harder to ignore. Small-caps funds across Europe have, as we know, been dealing with their own problems for a couple of years, but there are some green shoots that hint that fund managers are allocating more capital to smaller companies, and with this comes the prospect that the REIT sector becomes harder to ignore. One might cheekily suggest small-cap managers could do worse than just buying some shares in TRY but we all know that's not how the industry works. However, we think positive flows driven by technical factors could be very positive for the pan-European REIT sector generally and TRY specifically.

Bull

  • A one-stop shop for exposure to pan-European property companies
  • Large, liquid FTSE 250 trust
  • Discount has remained stable even during difficult period for the asset class

Bear

  • Gearing can amplify losses as well as gains
  • Some investors prefer to pick specialist real estate niches
  • Yield is lower than for many direct property REITs
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

02 Jul 2024 Fund Analysis
TRY makes investing in real estate simple…
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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