A listed property trust managed by Invista Real Estate this morning reported a 2.3% fall in net asset value due to the negative movement of interest rate swaps.

The Invista Foundation Property Trust – which is currently in preliminary takeover talks with the Picton Property Trust – said its NAV fell to 47.3p a share in the three months to 30 September.

The negative movement of the company’s interest rate swaps of £4.1 million over the quarter accounted for approximately half of the total decrease in NAV, the company said.  As at 30 September 2011 the total negative marked-to-market value of these swaps is -£30.64 million, representing 8.6 pps or 18% of the total NAV. 

The directly held property portfolio fell in value by £0.8 million, to £332m, or -0.2% on a like for like basis over the quarter, increasing to -£1.4 million or -0.4% after taking account of capital expenditure but before acquisition costs.

The trust also issued a cautious outlook for the market.

“Over the recent quarter, sentiment towards UK commercial property has weakened in the face of significant volatility across equity and debt markets,” the company said. “This has coincided with more property investments being offered for sale, particularly by banks and forced sellers, and reduced demand for all property types. There is still selective demand for prime assets at current prices, particularly in Central London and the South East, and this should be maintained given low interest rates and the further round of quantitative easing. 

“Relative pricing between prime and poor secondary / tertiary property has increased further, led by concerns over tenant default, falling rental values and voids, and consequently we expect poor secondary and tertiary values to fall further.  We continue to believe that there is value in small parts of the market for good secondary property offering good fundamentals and an attractive income return.”

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