The impact of rising interest rates on real estate investment trusts hit portfolio valuations at two London-listed REITs today, revealing that the industry-wide dip in investment demand is continuing.
As central banks lift interest rates, the yields on offer from safer investments rise, drawing money out of other parts of the market. This has knocked portfolio valuations for property companies, even as rents on shops and offices have rebounded as commuters and consumers return to the office and the high street after the pandemic.
Warehouse REIT, which rents storage and distribution centres out across the country, reported an annual loss of over £180 million. Its shares fell 2p to 101p.
New River REIT, which owns high street retail centres and out-of-town shopping parks, narrowed its loss to almost £17 million. Its CEO, Allan Lockhart, told The Standard it came amid “a recalibration of property yields to rising rates.”
He pointed out that liquidity was returning to the market, in a trend led by retail parks, adding: “We’ve seen a strong pick-up in shopping centres as well … our tenants are in a good place. About two-to-three years ago, there was a lot of restructuring in retail. We’ve seen over the last 12 to 18 months a significant reduction in tenant failures.”
New River’s occupancy rate hit 97%, the highest in five years. Its shares rose 1p to 86p.
