Over the course of September 2025, the NAV of the Fund increased by 1.0% (A Acc GBP), underperforming the UK Real Estate Index^*, which increased by 3.0%. Since its launch, the Fund has decreased by 0.9% (A Acc GBP), outperforming the UK Real Estate Index^* which has fallen by 21.0.% in the same period.

The strategy of the Fund is to invest in a diversified portfolio of thematic real assets. The Fund’s 22 investments are set to benefit from four socio-economic mega trends: ageing population (13.8% portfolio weight), digitalisation (25.6% portfolio weight), generation rent (21.8% portfolio weight), and urbanisation (11.0% portfolio weight). It will also invest in REITs with assets that encompass more than one of these trends (22.4% portfolio weight).

Within each mega trend, the Fund Manager undertakes fundamental research to identify the most attractive investment opportunities. Combining top-down analysis of socio-economic mega trends with bottom-up fundamental research has yielded good results for the Fund.

September was a good month for the UK-listed real estate sector. The digitalisation sub-sector performed the best, delivering 4.1%**. Generation rent and multi-theme assets were next, returning 3.7%** and 0.3%² respectively. Ageing population and urbanisation fell by 0.1%** and 0.2%**respectively.

The UK economy faced difficulties in September, with sluggish growth and higher inflation relative to other advanced economies. The Bank of England kept interest rates at 4%, with markets cutting back their expectations for further interest rate cuts through to mid-2026. However, gilt yields remained steady in September. Attention turned to the Labour Party conference, where speculation of a potential leadership challenge to Keir Starmer unsettled positive economic sentiment. A shift toward more expansive government spending could weigh heavily on the UK’s fiscal credibility, which is a key concern considering the already high deficits and sensitivity in government bonds. Markets are looking ahead to the Autumn Budget in November, with investors assessing whether the UK can maintain its current levels of fiscal discipline.

M&A activity continued into September, with Blackstone receiving more than 50% of acceptances from shareholders in respect of its cash offer for Warehouse REIT (portfolio weight 5.2%), which valued the business at a c.10% discount to NAV. The Fund Manager did not tender its shares prior to the deadline as it did not believe the offer reflected the true worth of the business to a motivated buyer. The Fund Manager has since received its cash back which it has redeployed back into the Fund. In addition, PRS REIT (portfolio weight 4.2%) agreed non-binding heads of terms for a proposed sale to funds advised by Waypoint Asset Management, with expected net proceeds equivalent to c.115p per share, or a c.17% discount to NAV. There are other potentially interested parties, including Long Harbour and KKR, but time is running out for a counterbid. Finally, Life Science REIT (LABS) completed its strategic review, concluding that a managed wind-down is the best route to maximise value for shareholders. If shareholders vote in favour, the process will take 12 to 18 months.

The Fund added Harworth (portfolio weight 2.5%), which acquires and transforms large, complex, often former industrial sites into sustainable residential, industrial and logistics developments. Harworth manages the entire lifecycle from land acquisition and master planning to remediation, infrastructure, and direct development or land plot sales to housebuilders, with some assets retained for recurring rental income. During the month Harworth published a solid set of results, highlighting a portfolio valuation of £319.3 million and a reduced vacancy rate of 4.9%. Lynda Shillaw, CEO of Harworth said, “Our land bank remains one of our superpowers and with our proven track record in unlocking its embedded value, we remain focused on identifying and executing those opportunities that optimise returns and drive the business forward to reach our strategic goals of £1 billion of EPRA Net Disposal Value (NDV) and the growth of our core Investment Portfolio to £0.9 billion by the end of 2029.”

The Fund Manager remains optimistic about the Fund’s performance due to the continued M&A activity, along with the strong underlying performance of portfolio assets and confidence in the mega trends. This further reiterates the positive growth potential of the UK REIT sector. Investors should look to the attractive, growing dividend yield and the potential for further upside. While growth concerns continue to impact capital markets, the four socio-economic mega trends - ageing population, digitalisation, generation rent and urbanisation - are set to gain. There is reason for increased optimism across these mega trends as the Fund continues to invest in defensive, domestic and dependable assets.

*MSCI UK IMI Core Real Estate Net Total Return GBP.
**Defined as the calendar month, as opposed to the valuation month.