A few questions on UK property REITs / investment trusts

tg99

Hi

1. Can anyone advise the best data sources for comparing NAV discounts and premiums among closed-ended property vehicles? I know websites like Hargreaves and Trustnet show the NAV and graph how the premium/discount has moved over time but would be useful to know anything better out there. Is there anywhere you can set an alert for when the premium/discount versus the estimated NAV for a fund hits a certain level?

2. Which resources do you use for research of these funds other than standard financial websites like the above, e.g. sourcing analyst research etc? I note that you can sign up to Winterflood’s investment trust research but need to be classified as a professional investor.

3. Where websites like Hargreaves / Trustnet show the estimated NAV, anyone know what data is used to update the last published NAV in order to calculate this?

4. I see for some vehicles the NAV and associated premium/discount data is shown on Hargreaves, e.g. for Schroder Real Estate Investment and Std Life Property Income, but for others like Tritax Big Box, Shaftsbury is not. Is this because the former two are essentially run as commercial property funds in contrast to more specialist vehicles like the latter two?

5. Linked to my question 3, I am also trying to work out how the data works for the graphs on Hargreaves for say Schroder Real Estate Investment and thus how accurate the various data on estimated NAV and premium/discount actually is – the last published NAV was 56.1 relating to 31 Dec but released to the market in late Jan whereas the graph of price and NAV shows the NAV at roughly that level (ex a small fall in early Feb when it went ex div) until a big c8% jump to over 60 in early March; but with no material corresponding move in the premium/discount chart. And in the last few days the premium/discount chart shows a big drop in premium of c10% with no corresponding change in price or estimated NAV.

Thanks.

BarrBru

No I don't know of a website where you can get alerts on discounts and premiums.

I use the AIC website https://www.aic.co.uk for metrics on ITs and REITs and specialist websites like https://www.whichinvestmenttrust.com and https://www.moneyobserver.com for research and analysis.

If you find anywhere I'd be interested in knowing too.

bowlhead99

However you look at it, the value of a property holding company on a daily basis is not going to be an exact science. Typically, funds just publish quarterly factsheets.

So you can go look at the quarterly factsheet for Schroders REIT for December, published mid-Feb, and see that it had £x million of assets with a snapshot of the values of the top ten buildings and some information about the concentration of rental income from specific tenants http://www.srei.co.uk/quarterly-factsheets#2014 This shows that the value that they are now telling you against the price that a share was actually trading on 31 December, represented a premium.

You can also go and look at the other RNS announcements they made since, either on the company's own website (http://www.srei.co.uk/news-filter-yeartab) or on a news aggregator like (http://www.investegate.co.uk/Index.aspx?searchtype=3&words=srei) which covers a much wider range of companies (but might on some occasion miss a few types of notices). Looking at the news and piecing together all the published info will tell you if they issued or plan to issue new shares, or redeemed some, or perhaps turned an unrealised valuation of a property into a realised profit or loss by selling something. So you can find out what is happening as it gets announced to the market.

However, they don't update the NAVs daily, as they don't revalue properties daily. I guess rental yield and expenses are rough constants but hard to tell until you get the next periodic report. So an NAV vs price discount/premium showing on any third party website, unless it has just been announced by the company for a specific date, is just a guess. The guesstimated discounts/premiums, if any, might suddenly get snapped into line even if the price doesn't change, when new data is announced (for example the company publishes its December estimated NAV, in mid-Feb).

The discount / premiums are only guesswork unless the fund is a fund that can announce daily NAVs because its assets are simply investments in other listed liquid funds which have daily trading prices - then you could say what its own daily NAV is and compare it to the daily price. You still wouldn't necessarily know what underlying asset value you're getting for your money of course, because the underlying funds are only doing the quarterly or half-yearly valuation exercises.

So, if you like the look of a fund, research it, and find out what you can, and see if you'd like an investment in it, making your own judgement. There is no one website that will easily and consistently lay everything out on the same page in terms of the fund's true holdings, profitability, real-time NAV against real-time price etc. Everyone is working on a delay except those industry experts who are closer to some of the individual transactions and valuations of properties.

In theory a fund monitoring website could increase or decrease their 'assumed' NAV for a fund based on all published share quantity information and a broad index of sector REIT prices. But it wouldn't be much of an exact science and would be flawed for all sorts of reasons.

So, no substitute for putting the legwork in yourself - with a very broad filter you will get misleading information and probably miss lots of opportunities for better or worse.

tg99

Yep it's more a case of finding out whether these 3rd party websites calcs of estimated nav are reliable or not as if they were then would save me reinventing the wheel and doing the calc myself. But having looked into this further and spoken to those involved there doesn't seem to be a clear answer how they calculate it (though Hargreaves took a look at that graph I mentioned in my OP and confirmed was wrong) so will revert back to doing my own estimate (primarily so I can get a rough idea of how much premium I might be paying for one potential fund holding versus the another to help as part of my selection process).