TR Property, the investment trust focused on the European property market says "political ineptitude" and a "lack of resolution" on the part of euro-area leaders has put downward pressure on property returns.
TR has two types of shares, "Ordinary", which aims at returns from a broad range of property investments across the EU and "Sigma" which specialises in property companies with a market capitalisation of less than £1.125bn.
The ordinary shares have seen their net asset value fall 16.2% in the half year to the end of September, under performing its benchmark, the Sterling FTSE EPRA/ NAREIT Europe Index which fell 15%.
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The share price total return, was down 7.3%, with interim dividend boosted slightly on the prior year, up from 2.3p to 2.4p.
Commenting on the results, the investment managers responsible for ordinary shares, Marcus Phayre-Mudge and James Wilkinson, said:
"The lack of tenant demand in many sub-markets coupled with the reduction in risk appetite has resulted in reinforcement of the polarisation between high quality assets in popular locations and, to put it bluntly, the rest. The yield gap between prime and secondary remains wide."
Sigma shares saw their net asset value drop 18.5%, its benchmark, the Sterling FTSE EPRA/ NAREIT Small Cap Europe Index, dropped 16.2% over the same period. The share price total return dropped 8.3% in the six months to the end of September although interim dividend was lifted slightly from 0.90p in 2010 to 0.95p this year.
Commenting on the worrying under-performance, James Wilkinson, the Sigma fund manager, said:
"Sigma's under-performance can be largely attributed to its underweight positions in Switzerland. This is a market that we have consciously avoided due to unappealing fundamentals and expensive stock prices but which has performed remarkably well on the back of a flood of money buying Switzerland due to its perceive safe haven status."
TR shares dropped 1.27% at the open to 148p. Over the year to date the shares are down 11.6%, over the last five years the stock has fallen 37%.
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