abrdn Property Income Trust – Laser focus on the basics

The discount rating amongst the UK real estate sector has widened dramatically since the end of September after the ‘mini’-budget caused bond yields to rise above property yields. Gilts have reduced since October and even though the repricing of real estate is likely to have further to play out, abrdn Property Income Trust’s (API – formerly Standard Life Investments Property Income Trust) finds itself on a near 50% discount.

Higher debt refinancing costs secured at the height of the volatility have since been reworked on better terms. The trust has outperformed its peer group in NAV terms over all medium to long-term time periods and the manager says that it is now focused on growing rental income. It adds that API’s portfolio has 23.0% of reversion potential, equivalent to £6.2m of additional rent, and recent letting deals and space under offer would boost earnings and bring its vacancy rate below 5%.