UK real estate investment trusts have lost close to a third of their combined market capitalisation as equity markets have plunged and the coronavirus crisis worsened.
At the close of trading on 13 March, REITs on London’s main market and junior AIM exchange had a combined market cap of £47bn, according to data provided to EG by the London Stock Exchange Group.
That marks a drop of about £21bn, or 31%, from their market cap of £68.3bn when the markets opened on 2 January.
The drop for real estate has been largely in line with the main London indices – the FTSE 100, FTSE 250 and FTSE 350 each fell by roughly 28% over the same period. The AIM All-Share was down by 22%.
Stock markets around the world have seen huge amounts of volatility as investors weigh up the likely economic impact of the spread of Covid-19.
Plummeting equity markets have compounded share price falls for companies already struggling, such as intu Properties, whose stock has tanked after an aborted fund raising made even clearer the problems on its balance sheet. Between 2 January and 13 March the company’s shares lost 88% of their value.
Today, NewRiver REIT said it is suspending all “non-essential” projects and postponing its fourth quarter dividend due to the pandemic.
Although the company said it was too early to quantify the effect on its business, it will update shareholders in its upcoming results. The company’s shares fell by 37% between 2 Jan and 13 March. In morning trading after today’s announcement they were down roughly 16%.
Other firms have seen less notable falls, including Target Healthcare REIT, which was down 10% as of 13 March. Yesterday the company said in its results announcement that its “strong balance sheet and conservative leverage” should stand it in good stead during the crisis.
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