Fund commentary

Market Review
Recent trends in the UK commercial property market continued in February. Figures released last month revealed that total returns were 0.3% (down from 0.4% in January). Capital values declined for the fourth consecutive month, falling by 0.3%.

Fund Performance
Unit price performance was heavily impacted by the pricing move from an offer to a mid basis, which was motivated by the desire to treat customers fairly. The property portfolio valuation remained broadly in line with last month as negative market movement was significantly offset by asset management activity.

Fund Positioning
We continue to expect the secondary and regional markets to be most vulnerable to capital decline over the next 18 months. Tenant demand is likely to remain muted, while the progress of the development pipeline will be a key factor in underpinning rents.