In this webinar, Fund Manager Matt Norris and Senior Research Analyst James Peel, joined Cameron Gardner, Head of Distribution, to mark the seventh anniversary of the TM Gravis UK Listed Property (PAIF) Fund.

They reviewed seven years of income growth and performance, highlighted new investment opportunities, gave an update on 2026 and set out their outlook for 2027 and beyond.

Below are the key takeaways from the webinar and you can watch the replay here:

The Fund invests in a diversified portfolio of primarily UK-listed real estate investment trusts (REITs). It has Property Authorised Investment Fund (PAIF) status which allows eligible investors to receive distributions gross.

The focus is 'next-generation' real estate: modern, high-quality buildings positioned to benefit from long-term structural change. Underlying holding examples include Primary Health Properties' purpose-built community healthcare facilities, Tritax Big Box's Littlebrook site in Dartford (Amazon's largest e-commerce fulfilment centre in Europe), Whitbread's Premier Inns, Grainger's build-to-rent homes and Great Portland Estates' Hanover Square development above a new Elizabeth line entrance.

The Fund holds more than 20 investments with a combined market capitalisation of around £50bn, trading more than £400m a day.

The forward dividend yield is currently 5.6%. Analysts' consensus forecast is for 2.8% dividend growth, which the team believes undershoots what the portfolio has historically delivered. There is 13% upside to analyst consensus price targets, and further M&A could add more: the average takeover premium the Fund has received is 24%.

Since launch in 2019, the Fund has grown its dividend at an annualised 7.8%, against annualised UK CPI of around 4.8% over the same period. In five of the six discrete years with year-on-year growth, dividend growth beat inflation by a clear margin.

Cumulative dividends paid since inception are ahead of those from a UK property ETF, and distributions from global real estate have been lower still. The team describes listed real estate as 'growth income, not fixed income'.

Looking to 2027, the team expects income growth to be ahead of analyst forecasts and, once again, to exceed inflation.

Since inception the Fund has delivered positive performance, while the iShares UK property ETF used for comparison has lost money. The team describes itself as long-term investors rather than traders: backing management teams and supporting them in capital raises.

The Fund has delivered alpha versus the ETF in all but two years. 2020 was a year of significant outperformance, when the decision to avoid retail paid off. In 2023 the Fund underperformed as higher-beta stocks and the large diversified REITs, which it does not hold, rallied.

Year-to-date underperformance in 2026 is largely down to one stock, SEGRO. It is the Fund's largest position, but the index holds more than twice as much. The Fund is nonetheless up mid-single digits this year, following a strong 2025.

The Fund has been on the receiving end of 16 takeover approaches over seven years. The team sees this as evidence of its stock-picking, rather than a deliberate strategy, and its bias towards quality.

The team distinguishes between three measures. Price is the share price on screen. Value is the output of a discounted cash flow or property valuation model. Worth is what a portfolio is worth to a motivated buyer. The team will engage actively with boards and bidders to secure what it believes a business is worth.

Several deals have created larger, more efficient listed companies, including Primary Health Properties' merger with Assura and the acquisition of Picton by LondonMetric and Schroder REIT. Most recently, Gravis has been vocal on price, value and worth following Prologis's approach for SEGRO. A planned dual listing of Prologis, the world's largest logistics REIT, on the London Stock Exchange would give UK investors access to a world-class business.

The Fund offers daily dealing and has never suspended. It has never been subject to a material uncertainty declaration, a valuer's statement that property valuations cannot be relied on with the usual confidence, which led many open-ended direct property funds to suspend dealing during the COVID-19 pandemic.

The team argues those funds face a structural mismatch: owning physical assets, which are typically older and therefore more challenging to sell, in a vehicle offering daily dealing. Some investors have been unable to access their money for well over a year. By contrast, the Fund's holdings trade more than £400m a day, giving it a deep, liquid universe while retaining property's role as a diversifier in multi-asset portfolios.

The sustainability of the underlying property has improved steadily, measured by the Energy Performance Certificate (EPC), a rating of a building's energy efficiency from A (best) to G. At launch in 2019, around 40% of the underlying portfolio was rated EPC B or better. That has risen every year and now stands at around 70%.

This matters for two reasons. First, regulation: although the timetable has shifted, commercial property currently looks set to need an EPC of B or better by 2031, creating a real risk of stranded assets for owners of the many buildings that fall short. Second, tenant demand: landlords increasingly need better buildings to attract and retain occupiers. Great Portland Estates, for example, has fully pre-let the office and retail space at its Duke Street redevelopment, a project with strong circular economy credentials.

The strength is broad-based. All of Target Healthcare REIT's care homes are already rated B or better. Holdings at the other end of the spectrum often have good reason to be there: Schroder REIT runs a 'brown to green' strategy, using sustainability-led asset enhancement to drive higher rents and capital values.

The investment process has not changed in seven years. The team builds a diversified portfolio through active stock selection, with an unashamed bias towards quality and businesses with low to moderate leverage. It is unconstrained and high conviction, often holding higher weights than the index in smaller names. The aim is dependable quarterly income and capital appreciation over a full cycle.

The team keeps costs down by participating in placings, where it can buy new shares at an attractive price without paying stamp duty or commission. The wider investable universe has a combined market capitalisation of around £70bn and trades more than £570m a day.

The portfolio is organised around five evidence-based mega trends, approximate weights shown:

• Digitalisation (c.40%): e-commerce fulfilment and, increasingly, data centres, through SEGRO and Tritax Big Box.
• Urbanisation (c.20%): West End offices, self-storage and essential retail, through names such as Derwent London and Big Yellow.
• Ageing population (c.16%): care homes and GP surgeries through Target Healthcare REIT and Primary Health Properties. The team calls this the ballast of the portfolio.
• Generation Rent (c.16%): professionally managed build-to-rent homes and student accommodation, through the likes of Grainger. Rents are tied to wage growth, offering a good inflation hedge.
• Experience economy (c.8%): a new mega trend covering the places people stay, play and spend, including Whitbread and Shaftesbury Capital, owner of Covent Garden, Chinatown and Carnaby Street. Consumer spending is shifting towards shared experiences such as dining out, travel and live events, and destination assets capture that spend through rent.

The team has added three companies to the portfolio this year.

Whitbread: added in Q1. Best known as the owner of Premier Inn, the UK's largest hotel brand with around 850 locations. Although not technically a REIT, it owns and operates next-generation branded real estate with a large development pipeline. Unlike most hoteliers, it owns around half of its freeholds, strengthening the balance sheet. Interim results last month showed better-than-expected profits and progress on exiting standalone food and beverage to become a pure-play hotel business.

Hammerson: now a concentrated portfolio of flagship mixed-use destinations, such as the Bullring in Birmingham and The Oracle in Reading. After a decade of headwinds from e-commerce and the pandemic, retail has repriced and offers healthy fundamentals at attractive valuations.

Supermarket Income REIT: owns around 140 supermarkets across the UK and France. Recent milestones include internalising its management, a joint venture with Blue Owl and several equity raises to fund earnings-accretive investment. It offers long-term, inflation-linked income from high-quality tenants, with a dividend yield of around 7.5% forecast to grow by about 2% a year.

International investors have recently declared stakes in several of the Fund's holdings, drawn by valuation discounts, quality assets and strong operating platforms. The team expects discussions in the coming weeks and months on how to unlock that value.

UK REITs have raised nearly£1.3bn of new equity in 2026 across multiple subsectors, to fund new investment. The Fund participates selectively:

• Tritax Big Box raised £350m in August to fund its data centre development pipeline, at a forecast yield on cost of around 10%. The placing was priced at a 4.5% discount to the undisturbed share price.
• Supermarket Income REIT sought £50m in November and raised £60m, around 5.5% of its equity, at a 2.8% discount. The assets being acquired yield 7.3%, mostly with inflation indexation. The Fund received an allocation well above its pro rata entitlement, which the team attributes to its long-term relationships with management teams.

SEGRO is the largest position, followed by LondonMetric, Target Healthcare REIT and Primary Health Properties.

Year to date, each top contributor has outperformed its comparator among the detractors, and more capital is deployed in the winners than the losers. The team sees the detractors as future potential: self-storage names Safestore and Big Yellow should benefit if the economy picks up, Schroder REIT's costs should fall as it integrates the Picton assets, and student accommodation should benefit from a recovery in student numbers.

The Budget contained important takeaways for listed property. Whitbread stands to benefit from a scaling back of the planned increase in business rates for hospitality, funded by higher taxes on gambling companies rather than other property sectors, as had been feared.

Professional residential landlords such as Grainger also stand to gain. Property income tax is set to rise again, which could prompt more small-scale landlords to exit the market, and the government's new home-buying scheme looks less ambitious than expected and will not launch immediately. Combined with the Renters' Rights Act, which came into force earlier this year, the team sees a positive supply-demand set-up for professional landlords.

Recurring rental income: a large proportion of the portfolio benefits from leases with contractual uplifts or inflation-linked escalators (built-in annual rent increases). At Tritax Big Box, around two-thirds of leases include an escalator, and with an average lease length of almost 10 years this gives high visibility of rental growth.

Reversionary potential: the gap between current rents and higher market rents, which arises when demand for a property type outstrips supply. Tritax Big Box's reversionary potential was almost 30% at the end of last year: if every lease were renegotiated today, rental income would rise from 100 to 128. Combining contractual uplifts with gradual reversion capture, it grew like-for-like rents by around 4% last year and is on track for a stronger 2026.

Strong balance sheets: these turn top-line growth into earnings growth in a sector that uses leverage. Across the portfolio, the weighted average cost of debt is just under 4% and the weighted average debt maturity is around five years, limiting near-term refinancing risk. The vast majority is fixed rate.

The FCA's thematic review of retirement income (TR24) highlighted concerns about suitability, withdrawal sustainability and sequencing risk in decumulation strategies. Sequencing risk is the risk that poor returns early in retirement, combined with withdrawals, permanently deplete a portfolio.

Once retirees begin drawing income, the emphasis shifts towards cash generation, income resilience and avoiding selling assets in periods of market stress. Because REITs derive returns from contractual rental income, the team believes UK listed property offers natural income, inflation linkage, liquidity, diversification and potential capital growth, which align closely with the challenges TR24 identified.

The team sees a disconnect between growing asset values and the discounts to net asset value (NAV), the gap between a company's share price and the value of its underlying property. The sector discount is currently around 25%, against a long-run average of around 20%. The team estimates the Fund's portfolio trades at a 27% discount to what the businesses are actually worth.

Even the highest-quality mega trends trade at wide discounts. The ageing population holdings, with government-backed income from GP surgeries and multi-year income growth from care homes, are a good example.

The Fund's exposure also differs from the ETF. Around 24% of the ETF sits in a single stock, SEGRO. The Fund is overweight Generation Rent, where international capital has already spotted the opportunity at Grainger. It has no exposure to the large diversified REITs, British Land and Land Securities, preferring specialist owners and operators of next-generation real estate.

Proprietary Gravis research defines a wide discount as a month-end discount to NAV of 30%. Historically, buying REITs at that level has delivered an average return of 23% one year later and 49% two years later. The two-year return has been positive 95% of the time; the exceptions coincided with recessions involving mass unemployment.

Forecasts for the direct property market are also supportive. UK commercial real estate is forecast to deliver 7.0% annualised returns to 2030, made up of around 5% income return and 2.1% capital growth (subject to rounding), with rental growth of 2.5% a year. The team expects specialist owners exposed to its mega trends to outperform that.

The team describes its holdings as PACE businesses: physical assets compounding earnings. The concept builds on the HALO trade' in which investors favoured hard assets with limited obsolescence risk, but adds the ability to compound earnings. The team sees four drivers:

• Operational compounders: owner-operators of branded real estate, such as Big Yellow and Whitbread's Premier Inns.
• Contractual compounders: long, often index-linked leases, such as Target Healthcare REIT. These provide stability and diversification.
• Stepped compounders: companies where in-place rents sit well below market rents, so rents step up as leases are renegotiated. The team sees this reversion as pure upside in 2027 and beyond.
• Cyclical growers: West End developers such as Derwent London and Great Portland Estates, which acquire, redevelop or extend buildings, let them and capture development profits.

Many holdings have long records of dividend growth through economic cycles, the pandemic and credit crises. Primary Health Properties has grown its dividend per share for 30 consecutive years, Derwent London for 18, Safestore for 16 and Sirius Real Estate for 12.

Management guidance points to significant multi-year growth:

• Derwent London upgraded its 2026 forecast and maintains guidance of 25–30% earnings growth by 2030 versus 2025.
• Grainger expects 35% earnings growth between FY25 and FY29.
• Tritax Big Box is targeting 65% growth in adjusted earnings by 2030/31.
• Whitbread expects to generate £2bn available for shareholders by 2031.

The drivers are continued rental growth, positive occupancy trends and constrained development pipelines. Not every owner has the skills, raw materials or access to capital to build next-generation real estate, which limits supply and benefits those who already own it.

The team views 2027 and beyond with considerable optimism. It sees three sources of potential upside: the discount to NAV, further M&A and the gap to analyst consensus price targets. Together with an attractive yield and dividend growth ahead of inflation, the team believes UK listed property offers a compelling opportunity at today's valuations.

Important information

This document is issued by Gravis Advisory Limited (“GAL”)), and Gravis Capital Management Limited (the "Investment Adviser” or “GCM”) and is for information purposes only. Both GAL and GCM are authorised and regulated by the Financial Conduct Authority and their registered office address is 24 Savile Row, London, United Kingdom, W1S 2ES.

TM Gravis UK Infrastructure Income Fund is a sub-fund of TM Gravis Funds ICVC, which is a UK UCITS scheme and an umbrella company for the purposes of the OEIC Regulations.

TM Gravis UK Listed Property (PAIF) Fund (the “Fund”) is a sub-fund of TM Gravis Real Assets ICVC, which is a non-UCITS retail scheme and an umbrella company for the purposes of the OEIC Regulations. The Fund is a Property Authorised Investment Fund (“PAIF”). 

The Authorised Fund Manager of TM Gravis Funds ICVC and TM Gravis Real Assets ICVC is Thesis Unit Trust Management Limited (TUTMAN), Exchange Building, St John’s Street, Chichester, West Sussex, PO19 1UP. TUTMAN is authorised and regulated by the Financial Conduct Authority. GAL is the investment manager of the Funds.

Neither GAL nor GCM offer investment advice and this article should not be considered a recommendation, invitation or inducement to invest in a Fund, or subscribe for, dispose of or purchase any such securities or enter into any other transaction in the GCP Infrastructure Investments Ltd (the “Company”) or any other fund affiliated with Gravis. Prospective investors are recommended to seek professional advice before making a decision to invest. The merits and suitability of any investment action in relation to securities should be considered carefully and involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of such securities.

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Past performance is no guarantee of future performance.

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