REITs – Uncertain discounts

Lots of losses reported this week among the large listed commercial REITs. The word ‘uncertainty’ seemed to feature in lots of the chief executives comments…

We’re mindful of future uncertainty Chris Griggs, British Land

The outlook in the short term is one of uncertainty — we have a government that is set to trigger Article 50 [to leave the EU] in the next 90 working days and business doesn’t really know what its trading environment is going to be. Rob Noel, Land Securities

we can expect London’s property market to weaken during this period of uncertainty. Toby Courtauld, Great Portland Estates

Discounts to NAV seem to imply a further large correction in the market. Land Securities is trading at a 30% NAV discount and GPE at 24%.  A year ago Land Securities was trading at a 20% discount to NAV.  It looks cheap by historical measures or else there’s a lot more ‘uncertainty’ in the prices than in the statements.

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