After a prolonged winter for listed real estate, early signs of spring are beginning to appear. For investors assessing allocations to property equities, two related developments stand out. The first a subtle shift in the balance of power between public and private markets. The second is the return of growth capital to high-quality listed platforms.

Private capital has been circling listed real estate through a period of wide valuation discounts, particularly in the UK REIT market. When Blackstone reported earnings, president Jon Gray was explicit that the firm continues to look for privatisations, noting that parts of the public real estate market have been lagging.

This public-to-private arbitrage relies on acquiring assets below intrinsic value and capturing strategic worth (control, platform leverage, branding and future development optionality) without paying for it. Yet recent history shows that this strategic value does not always need to be surrendered. Industrials REIT in 2023 and Lok'nStore Self Storage in 2024 were sold at double-digit premiums, demonstrating that well-positioned platforms can command full value.

Markets, of course, do not stand still. Since Blackstone’s results, UK REITs have appreciated by approximately 2.5% in just three weeks. Big Yellow Self Storage now trades around 9% above its level prior to last October’s disclosure of discussions regarding a potential sale. These moves matter because take-private transactions depend on a pricing gap, and that gap narrows as confidence returns.

More recently, Sirius Real Estate, a holding in the TM Gravis UK Listed Property Fund, has successfully raised £77m of new equity at a small premium to its closing share price. In a market that has, for months, been defined by discounts and caution, this matters. Issuing equity at a premium is a tangible signal of renewed investor confidence and healthy demand.

The capital raised by Sirius Real Estate will fund two near-term German acquisitions totalling €130m, both with a defence bias: a sale-and-long-term leaseback of a production facility in south-west Germany, and a multi-tenanted industrial site in the north. The blended net initial yield of 7.6% compares favourably with the group’s last reported net yield of 7.3%, with management expecting the transactions to be cashflow accretive in the next financial year. Importantly for income-focused investors, the company intends to maintain its progressive dividend policy, extending a record of 24 consecutive half-year increases since 2014.

The demand backdrop reinforces the investment case. Germany’s 2025 fiscal stimulus package, estimated at €1tn and directed towards infrastructure and defence, is expected to support increased occupier demand for industrial space. This political reprioritisation appears real, providing tangible support to specialist platforms with the expertise to deploy capital selectively.

Today, the two themes are connecting. As spring returns to listed real estate, optionality is shifting back towards shareholders. That optionality may take several forms: public-to-public mergers to capture scale and synergies, or renewed access to equity capital to fund growth without relinquishing control as demonstrated by Sirius Real Estate.

Specialist real estate companies, run by experienced management teams, deserve support when they identify attractive, accretive opportunities. Winter conditions favour privatisation, but as capital flows back and valuations rerate, boards regain strategic latitude and investors regain exposure to growth, income resilience and long-term strategic value within the listed market.

Spring in listed real estate begins when companies can fund growth again on their own terms. The green shoots are starting to show.

Important Information

This article is issued by Gravis Advisory Limited (“GAL” or the “Firm”)), which is authorised and regulated by the Financial Conduct Authority. GAL’s registered office address is 24 Savile Row, London, United Kingdom, W1S 2ES. The company is registered in England and Wales under registration number 09910124.

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”).

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