In this short video interview, Matthew Norris, manager of the VT Gravis UK Listed Property (PAIF) Fund, and James Peer, senior research analyst, discuss why now could be a good time to invest in UK REITs. 

It’s a sentiment shared by the Association of Investment Companies (AIC) and CEOs of underlying holdings in the Fund.

In a recent note, the AIC said: “Investment company managers believe that the time has come for investors to embrace REITs, taking advantage of historically wide discounts that effectively give investors access to property at knock-down prices.

“They argue that improving fundamentals such as growing rents, rising demand for quality properties and ongoing mergers and acquisitions in the property sector will enhance returns for investors in the coming year and beyond.”

Kenneth MacKenzie, CEO of Target Healthcare REIT, a top ten holding in the Fund*, said: “Many [REITs] are trading at significant discounts to their net asset value, offering investors the chance to acquire real estate below its true value. This gap reflects past market headwinds, including high interest rates and sector-specific pressures. But with expectations of rate cuts from the Bank of England later this year, sentiment is starting to improve. If interest rates ease and yields become more attractive relative to other income assets, REITs with strong balance sheets could deliver income whilst share prices rise.”

Bradley Biggins, Fund Manager at Schroder Real Estate Investment Trust, which was a new position in the Fund in May 22025, agrees: “This is an interesting time for UK real estate,” he said. “Following a 25% correction to average commercial real estate values there is an attractive income return available. We expect continued rental growth as there is a thin pipeline of development projects given the level of construction costs following high inflation, and there is a shortage of quality space with strong sustainability performance that occupiers are favouring.

“Structurally supported sectors such as multi-let industrial estates and convenience led retail warehouses will benefit most. There has only been modest capital value growth since the correction, so rental growth combined with modest yield compression as we progress through an interest rate cutting cycle should support capital values and combined with an attractive income return, will result in above average total returns in the coming years.”

In the video, Matt and James also talk about Government policy tailwinds, why the UK’s top quality universities and office space makes UK real estate investment attractive, and how, as active managers, they have been focused on achieving maximum value for shareholders during recent M&A activity.

A transcript of the interview, which has been edited for ease of reading, is below.

Why could now be a good time to invest in UK REITs?

Matthew Norris: I think it can be broken down into two parts: the property fundamentals and the valuations. If you look at property fundamentals first, the mega trends that we invest in are experiencing real positivity right now. In ‘Generation Rent’ we're seeing really nice rental growth coming through. Likewise, within ‘Digitalisation’ and ‘Urbanisation’ – in particular West End offices – there’s really strong rental growth. Occupancy also remains strong across the subsectors and property types that we invest in.

If you look at the cost of financing for the REITs that we invest in, interest rates are coming down. That means the cost of financing is under control. So, growing rent, and moderate increases in the cost of financing compared to where we were a couple of years ago means that we should continue to see dividend growth. The fundamentals of the businesses are strong.

James, maybe you address the valuation side?

James Peel: We can quantify the valuation opportunity by looking at the discount to NAV that our sector has at the moment: approximately 25% compared to a 10-year average of about 17%. So that's the opportunity in front of us. And we can see that clearly across all of the mega trends that we invest in. I think it's important to add that we're paid to wait in the meantime, with an attractive 5% approximate dividend yield. It's higher than our sector and, importantly, on a real versus real basis, higher than index-linked yields.

Why UK REITs specifically?

Matthew Norris: There's lots of good things going on in the UK, especially within real estate, and within the mega trends that we invest in. Take ‘Generation Rent’, for example, and purpose-built student accommodation. Three of the top 10 universities in the world are in the UK and the UK has more top 50 universities than the rest of continental Europe combined. Great universities mean lots of students, which mean good demand for purpose-built student accommodation.

If you look at office space, London is one of the top global cities and it has the West End of London, where many businesses want to be located. So demand exceeds supply for offices right now. That's good news for the companies that we invest in. It's good news for rent, and it's good news for development profits.

James, what else do you like about the UK?

James Peel: I’ll just highlight a couple of recent announcements from our government. We had the spending review a few weeks ago, with a couple of different key packages for the sectors that we invest in across infrastructure. In real estate, we had the 10-year infrastructure plan as well. And then later this year, we're likely to get the 10-year healthcare plan that will lay out the potential tailwinds for our ‘Aging Population’ mega trend.

Matthew Norris: What's really interesting about what's happening in the UK, as James touched upon, is the UK market is trading at a discount to asset value, even though we've seen many individual bids for UK-listed real estate companies. There have been individual companies that have re-rated, but there hasn't been a step re-rating in the overall market. Certainly, that valuation gap is slowly closing, but it still remains. And what's interesting is, when you drill down into it, across the mega trends that we invest in there's still clear discounts out there. So we would not be surprised to see further rerating in this space.

James Peel: I might just add that there are five or six deals on the table at the moment, and there's still a lot of work to be done. We've seen over the past few months through active engagement with boards and bankers, the benefits of being long term investors, not traders. And we like to think that we'll be able to achieve maximum value for our shareholders with these current deals on the table as well.

Matthew Norris: And if we can't get maximum value, we certainly endeavour to get a price bump.

Important information

This video and transcript are 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.

VT Gravis UK Listed Property (PAIF) Fund (the “Fund”) is a sub-fund of VT 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”). Valu-Trac Investment Management Limited is the Authorised Corporate Director of VT Gravis Real Assets ICVC and GAL is the investment manager of the Fund.

Any decision to invest in the Fund must be based solely on the information contained in the Prospectus, the latest Key Investor Information Document and the latest annual or interim report and financial statements.

GAL does not offer investment advice and neither this video nor transcript should be considered a recommendation, invitation or inducement to invest in the Fund. Prospective investors are recommended to seek professional advice before making a decision to invest.

Your capital is at risk and you may not get back the full amount invested. Past performance is not a reliable indicator of future results. Prospective investors should consider the risks connected to an investment in the Fund, which include (but are not limited to), market risk, counterparty risk, inflation and interest rate risks and the risks of investing in real estate and related industries. Please see the Risk Factors section in the Prospectus for further information.

This video and transcript have been prepared by GAL using all reasonable skill, care and diligence. They contain information and analysis that is believed to be accurate at the time of publication but is subject to change without notice. They are not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Any recipients outside the UK should inform themselves of and observe any applicable legal or regulatory requirements in their jurisdiction.