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Financial Times: UK Property Trusts Suffer Steepest Fall in Five Years

According to The Financial Times: Share prices of the UK’s biggest real estate investment trusts have fallen by as much as 20 per cent in the past three months, sparking concerns of a broader weakening of property markets.

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On average, the Reits are trading at a 7 per cent discount to net asset value, according to Hemant Kotak at Green Street Advisors in London, down from an 11 per cent premium at their high point last year. Specialists have suffered less badly than the largest trusts.

Meanwhile prices for buildings in the UK have matched or exceeded previous highs, leading to concerns the property market may have reached a peak, said Mr Kotak.

He pointed out that the last time Reits suffered such a steep fall was in 2011, although they also wavered in 2013.

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“This may be a wobble or it may be something more serious than that,” said Mr Kotak. “The public market can often do a good job of anticipating what might happen in private markets.”

Share prices began falling last August when Mr Prew issued downgrades on a series of real estate stocks. “Our message was that the real estate market was about to stall,” he said.

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Mr Kotak was more optimistic, however, suggesting the Reit sell-off was overdone. “The fundamentals of real estate remain quite good,” he said.

To view the full article on The Financial Times, click here.