It was all going so well, at least in the eyes of Ed Balls, economic secretary to the Treasury, who gave a bullish assessment to the Merrill Lynch Real Estate conference in March.
He spoke of his delight that there had already been 10 converters, and he expected more to follow. "It’s now for the industry to take the opportunities that UK Reits provide," the minister said. "There is space for innovation in the regime, and I look forward to seeing how the industry responds to that over the coming months and years. We in the Treasury will be watching the development of UK Reits closely."
Poor performance
However recent reports suggest that UK Reits are the worst performing in the world this year.
Their negative returns could lead analysts to downgrade the sector and foresee the end of the UK’s commercial property boom.
Only in the UK is the Reit market, as a whole, trading at a discount to the net value of the underlying property assets, the industry benchmark for valuing a property company.
Continuing interest rate rises have fuelled speculation about a downturn in the UK’s property market.