Over the course of April 2025, the NAV of the Fund increased by 4.6% (A Acc GBP). Meanwhile, the UK Real Estate Index* increased by 4.7%. Since its launch, the Fund has increased by 1.6% (A Acc GBP), outperforming the UK Real Estate Index* which has fallen by 20% 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 predominantly aligned with four key socio-economic mega trends: ageing population (19.4%), digitalisation (34.5%), generation rent (25.3%), and urbanisation (7.4%). Some investments – diversified assets – span more than one of these mega trends.

Within each mega trend, the Investment 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.

The strongest performing sector in April was urbanisation, which increased by 7.6%**. This was followed by diversified assets which increased by 5.7%**. Generation rent, ageing population and digitalisation also delivered positive returns of 5.6%**, 4.4%** and 3.7%** respectively.

Mergers and acquisitions activity continued in April. Assura (portfolio weight 5.1%), a developer, investor in, and manager of medical centres in the UK, received a combination offer from PHP, which was rejected by the board on the basis that it was “not at a level sufficient to be recommended”. A recommended cash acquisition of Assura by private equity firms KKR and Stonepeak followed a week later, with the Chair of Assura’s board commenting that the board is, “focused on delivering maximum value”. Meanwhile, Urban Logistics (portfolio weight 6.3%), an investor in UK based warehouses, received an offer from LondonMetric Property (portfolio weight 3.2%), offering 0.56 LondonMetric shares, 42.8p in cash and Urban Logistics’ interim dividend which is expected to be 4.35p. Urban Logistics Board have paused their internalisation process and is “minded to recommend” any firm offer from LondonMetric.

While the Investment Manager welcomes takeover interest, any offer must fully reflect a company’s long-term value. The key issue is not the headline premium to the last traded price, but whether the bid captures the true potential of the underlying assets. Where it falls short, the Investment Manager engages directly with the company to push for a more appropriate valuation.

In one example, the Investment Manager was among just 17 shareholders to vote against CareTrust REIT’s 108p-per-share cash bid for Care REIT — a deal that implied a 10.4% discount to the last reported EPRA NTA. In the Investment Manager’s view, the offer failed to reflect the business’s intrinsic value.

The Fund initiated a new position in Sirius Real Estate (portfolio weight 2.5%) in April, reaching the 2.5% target weight during the month. Sirius is a London-listed REIT with a portfolio of industrial and logistics assets in Germany and the UK and is an owner and operator of branded real estate with a healthy development pipeline and complimentary fund management business. Sirius’s management has an excellent track record of executing on their business model. Its dividend has also grown for 22 consecutive half-yearly periods, and they have the ambition to grow their funds from operations by c.30% in the medium term, which should lead to further dividend growth.

The continued M&A activity across the sector, coupled with strong earnings performance, highlights the positive prospects for the UK REIT sector. We are at a pivotal point for the asset class, with greater investment needed in specialist listed real estate to respond to social and economic changes and increased demographic shifts. 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