September  2009 VOL. 2

Foreign Exchange

The EUR 5 billion in new equity that has been pumped into the UK listed property sector via rights issues and share placement during the past 10 months appears to be having a strong stabilizing influence on the market, according to new Net Asset Value (NAV) research data from the European Public Real Estate Association (EPRA).

The average discount of share prices for companies in the FTSE EPRA/NAREIT UK Index to their NAVs, or value of underlying assets, was a record 46 percent at the market’s lowest point in March, but moved to a 4 percent premium—significantly above the 20-year average, as stock prices have soared, the latest data for August shows.

“The success of UK property companies in raising capital to bolster their balance sheets in the face of falling asset values and extremely tight credit conditions is a tribute to the reputation of these firms in the eyes of investors,” says EPRA Chief Executive Philip Charls. “We now appear to be moving away from restructuring towards companies positioning themselves to take advantage of investment opportunities as the market recovers.”

While UK property stocks have jumped more than 90 percent over the last six months, since the market’s floor, continental European real-estate securities prices and discounts to NAV have shown less extreme movements. The average NAV discount of the FTSE EPRA/NAREIT Europe Ex UK Index was 20 percent at the end of August compared to 45 percent in March, and the index has risen about 70 percent since its March 09, 2009, bottom.