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Can TR Property Investment Trust be the key to unlocking the property market?


Property is a core conversation topic in the UK, especially the price of houses. For years access to property for first-time-buyers has been a pipe dream, without leaning on inheritance or taking out a huge mortgage.

First-time-buyers hoped that the Coronavirus Pandemic and the reduced economic activity that this caused would see house prices fall. They didn’t. Then inflation happened post-Covid, and conflict in Ukraine exacerbated an already hot consumer economy. The world’s central banks did what central banks always do, and embarked on a campaign of raising interest rates to take some heat out of the economy and hopefully beat down inflation.

When central bank rates hit the high street, mortgage rates spiked which meant that they became a lot more expensive, putting them out of reach for many hopeful buyers. It was expected that the knock-on effect would be to make house prices fall, as less buyers were in the market. This happened, temporarily, but the reality is that the rise house prices has slowed down, not stopped.

The Distribution Story

At this point in the discussion, it’s also worth making reference to the trends of wealth distribution that we’ve seen since Coronavirus. What has happened, globally, is that the wealth of the ultra-high net worth has expanded massively, whilst the wealth of the middle-and lower-income earners has shrunk. The relief efforts conducted by governments globally, and especially in the West, to counteract lockdown saw a massive amount of capital injected into the economy, which has since the end of lockdown worked its way up the income scale, where at the top it becomes not disposable (or spending money), but investment capital.

And with investment capital, the top-tier of wealth buys assets, not consumables, and the primary asset is real estate and as such, with all this extra investment capital, the top tier has been buying assets, which has helped support prices. The top tier has also been taking advantage of high interest rates, collecting government-sponsored money in interest. But when those interest rates start to fall, the top tier will start to release some of that capital, lending it to mortgage borrowers, which when combined with continuing demand for assets from the top tier will see the price of property boom in the next few years.


If you believe in the property story a good way in is through the TR Property Investment Trust [LON:TRY] a GBP1.1bn, 40-year old (although with a much longer heritage), FTSE250-listed, UK Investment Trust. The fund is benchmarked against the FTSE EPRA/NAREIT Developed Europe Capped TR Net GBP and aims to maximise shareholders’ total returns by investing in the shares and securities of property companies and property related businesses internationally and also in investment property located in the UK.

Managed by Marcus Phayre-Mudge, who after working in investment surveying for Knight Frank, moved into property investment at Henderson Global Investors in 1997, and then on to Thames River Capital, where he worked with the TR Property Investment Trust. Thames River was acquired by Columbia Threadneedle Investments who now are umbrella managers for the investment trust. Phayre-Mudge is assisted by Alban Lhonneur who joined Columbia Threadneedle in 2008.

Both managers are keen to emphasise the fact that the fund maintains direct property investment as it gives them a hands-on sense of the property market and makes them better able to relate to management of their investee property companies. The portfolio is liquid, and can quickly repay any short-term borrowings, allowing the fund to quickly reposition its portfolio, much quicker than direct property trusts.

TR Property Investment Trust invests in pan-European property markets

The fund primarily invests in pan-European property markets primarily through a portfolio of listed property securities and REITs (Real Estate Investment Trusts), with a small exposure to direct UK property. Over the longer term, pan-European property shares have outperformed equity markets, and TR Property Investment Trust has generally outperformed its benchmark.

Obviously, with rising interest rates, things have been a bit more difficult for the investment trust over the shorter term. On a cumulative basis to the end of January, over five years the fund returned (on a NAV basis), 3.4% against a benchmark fall of -13.7%. Over three-years cumulative performance was more negative at -7.2%, but still beat the benchmark return of -16%. Over a year the TR Property Investment Trust was back in positive territory, returning 3.3%, beating the benchmark return by 3 percentage points.

Consistently outperforming its benchmark

On a discrete basis, between 2019 and 2023, TR Property Investment Trust beat the benchmark (on a NAV basis) by four years out of five, being on par with the benchmark in 2022/23.

It’s a very diverse portfolio, crossing various asset classes including Industrials, Residential, Shopping Centres and Student Housing with a portfolio of around 60 investments across 12 countries as well as having direct UK exposure and diversifies even more by investing in diverse REITs. The fund maintains gearing at about 15% over the longer term, but has the ability to go up to 20% and has dividend yield of around 5% and tries to deliver both income and growth.

TR Property Investment Trust top five holdings

Investment Weighting Headquarters
Vonovia 10.5% Germany
Klepierre 5.5% France
Land Securities Trust LON:LAND 5.3% UK
Psp Swiss Property [SIX:PSPN] 5.3% Switzerland
Gecina [Euronext Paris:GFC] 5.1% France

Source: Columbia Threadneedle Investments 31/01/24

The fund is well positioned to take advantage of the recovery (not that there is a great deal of recovery as explained above) and a potential boom in property values in the next few years. With continued supply constraints in Europe (and across the world), especially in cities, pricing for real estate will only, over the longer-term, go one way and after a bit of a setback for the fund, expect a strong recovery.

It’s a straightforward and relatively low-cost proposition, with a strong management team that has seen booms and busts before, with strong dividend growth that has consistently kept ahead of inflation. There are risks, as with all investments. Property might not recover – or at least fall some more before it roars back – and the fund’s gearing could amplify losses. Shares in the fund are traded on most platforms and can be accessed through Columbia Threadneedle directly (through a wrapper).

  • Find the latest research for TR Property Investment Trust on the AIC website

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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