Shaftesbury Capital, the London West End-focused real estate investment trust (REIT), has reported robust momentum entering the second half of 2025, reflecting a positive recovery and growth in the prime property market. Underlying earnings grew 16% to 2.2p per share for the first half, prompting an increase in the interim dividend to 1.9p from 1.7p per share. Net tangible equity also saw a rise of 3.3%, reaching 206.8p per share. This performance aligns with the company’s full-year results for 2024, which showed a 4.5% increase in portfolio valuation to £5 billion, driven by a 7.7% rise in estimated rental value (ERV). Shaftesbury reported an 8.0% like-for-like increase in annualised gross income to £202.8 million and maintained a low vacancy rate of 2.6% of ERV. Despite a notable 66% drop in pre-tax profit for 2024, largely due to the absence of a one-off gain realized in the previous year, the group’s operational metrics, including footfall and customer sales, continued to strengthen, underscoring resilience in the West End market. The company also proposed an 11% increase in its total dividend for 2024 to 3.5p per share, capitalising on strong leasing performance and a healthy balance sheet featuring £560 million of liquidity and an EPRA loan-to-value ratio of 27%.

Derwent London, the largest office REIT in London, has bolstered its investment portfolio by selling Francis House, a refurbished former Army & Navy store in Westminster, for £54.2 million before costs to a local government pension scheme. The disposal, which aligns with the December 2024 book value, yields a net initial yield of 4.9% for the purchaser. This transaction is expected to be slightly accretive to Derwent’s earnings as proceeds are recycled into assets with higher yields. Francis House is notable for its heritage and substantial floor-to-ceiling heights, with existing leases to Channel Four Television securing a steady rental income. Derwent’s strategic asset management, including the assembly of an island block in Victoria through acquisitions like Francis House, signals ongoing confidence in London office real estate despite wider economic uncertainties.

Unite Group, a leading student accommodation provider, delivered a solid first half for 2025, with adjusted earnings rising by 15% year-on-year to £144.2 million and adjusted earnings per share increasing 3% to 29.5p. CEO Joe Lister highlighted strong underlying demand driven by record university enrolments, including a notable recovery in international student recruitment, which reflects the UK’s growing appeal as a premier study destination. This positive trajectory marks an important counterbalance amid broader economic concerns, emphasising the resilience of the higher education sector within real estate investment.

Schroder British Opportunities (SBO) is pursuing a strategic refocus, seeking shareholder approval to concentrate its £55 million growth capital entirely on private equity and to advance its continuation vote to early 2027 from 2028. Though its net asset value per share showed only a modest 0.5% increase in the year ended 31 March 2025, the managers are optimistic given a “robust pipeline” of private equity deals. However, the company’s shares still trade at a 33% discount to net asset value, highlighting investor caution and underscoring the uncertain long-term outlook.

In the private equity space, Literacy Capital reported a 1.6% rise in net asset value per share to 519.5p for the quarter ended 30 June 2025. This uplift followed the partial sale and reinvestment in Velociti Solutions at a premium of 52% over the prior valuation, supplemented by contributions from two new portfolio companies, Red Sky and Trinitatum. Fund manager Richard Pindar noted that while the past 18 months featured challenging macroeconomic and political conditions, the recent signs of improving deal volumes and investor confidence could enhance NAV growth and share price performance.

Meanwhile, Apax Partners has raised its irrevocable commitments to support the recent cash offer for Apax Global Alpha to 38.43%, indicating a strong backing for the deal.

Bellevue Healthcare is preparing for a general meeting on 12 August to seek shareholder approval for continuing share buybacks under its zero discount policy, which has reduced the discount on its shares to an average 1.2% since April. The company’s activist shareholder, Saba Capital, remains influential in shaping these buyback strategies.

Among institutional holdings, Schroders has emerged with a 5.7% stake in Cordiant Digital Infrastructure, a £733 million investment company trading on a 25% discount. Raymond James Wealth Management holds a 5% position in Schroder Oriental Income, an Asia Pacific trust with a 4% yield and a 4.6% discount to NAV. UBS Bank and Wealth Management owns 5.8% of Abrdn Property Income, which continues its wind-down strategy, and whose shares currently stand on a 31% discount amid ongoing disposals.

Together, these developments illustrate a dynamic landscape in UK real estate and private equity investment trusts. While property companies like Shaftesbury Capital and Derwent London benefit from London’s sustained appeal and strategic asset management, other investment trusts are recalibrating their focus or navigating discount challenges amid shifting market conditions. The growing interest in student accommodation and infrastructure funds adds further texture to this evolving sector landscape.

📌 Reference Map:

Source: Noah Wire Services