Standard Life Investments property fund on front foot

● Trust generates positive returns over latest period ● But chairman cautions over fallout from Brexit

Standard Life Investments Property Income Trust has delivered a “positive” set of half-year numbers but its chairman has warned of the potential impact caused by Brexit uncertainty.

The fund posted a net asset value (NAV) total return of 5.6 per cent for the six months to the end of June, driven by its “outperforming” property portfolio.

Share price total return over the period came in at 2.4 per cent compared to the total return on the FTSE All-share REIT Index of 1.3 per cent and the FTSE All-share Index of 1.7 per cent.

As of the end of June, the portfolio was valued at some £458 million, up from £433m at the end of 2017.

The trust said it has generated a property total return for the period of 4.7 per cent, ahead of the IPD (Investment Property Databank) Quarterly version of Monthly Index total return of 4.2 per cent.

The portfolio had a 53 per cent weighting to the outperforming industrial sector at the period end with just 14 per cent focused on the more volatile retail market.

Chairman Robert Peto said the trust had continued its “trend of outperformance”.

He told investors: “I am pleased to report that your company has continued the positive momentum that has been delivered over the last few years.

“Over the last six months, the property portfolio has generated above benchmark returns, driven by overweight exposure in the strongly performing industrial sector. This has underpinned a robust NAV total return.

“In addition, the company’s shares continue to trade at a healthy premium to both NAV and the wider peer group.”

“There can be no doubt that the shadow of Brexit and the continued uncertainty surrounding the outcome of these negotiations has now impacted the real economy.

“Business investment, one of the predominant drivers for GDP growth, has been muted as businesses hold back until the UK’S future trading relationship with the EU is determined. Combined with subdued consumer spending, the growth in the UK economy was among the slowest of the developed nations in the first half of 2018.

“Against such a background the performance of the UK real estate market has been positive.”

Looking ahead, Peto said: “While there are undoubtedly other considerations, the largest element affecting the outlook for the UK economy is the Brexit ‘end state’ and what deal, if any, the UK secures upon leaving the EU.

“The uncertainty surrounding the outcome has not surprisingly led to muted economic growth forecasts. While real estate is not immune to the travails of the real economy, the asset class has continued to grow.”