After a rocky start for our Euro PIN Fund (a fictional fund of 10 property-related listed companies in the Eurozone), the Fund bounced back in spectacular fashion in the fourth quarter (we run our quarters for this Fund one month later so it does not overlap with our UK PIN Fund reports).
In the three months from the end of October 2020 to the end of January 2021, the Fund returned 23.8% thanks largely to three of the companies returning more than 30% each. However, our Fund was not too exceptional last quarter as European property equities rebounded across the board in Q4. Based on the FTSE EPRA Nareit Developed Europe sector indices, Europe’s listed real estate sector posted significant gains during the fourth quarter of the year (up around 16% overall), with every country returning positive market cap growth.
The strength of Europe’s year-end figures was further highlighted by the losses suffered by its North American (-6%) and Asian (-11%) counterparts.
Dilek Pekdemir, research manager at the European Public Real Estate Association, says: “The European listed real estate sectors performance in the fourth quarter of 2020 showed it to be one of the most resilient in the world. The sector has managed to steadily recover from the heavy losses suffered in Q1 2020, finishing the year in particular strong fashion. As we move into 2021, there are positive signs that recovery may well be underway, with the sector having managed to weather some of the worst impacts of the crisis.”
Now let’s look at how some of the companies in Fund performed in more detail.
Vinci boards the Grand Paris Express – Q4 return 18.7%; Total return in first six months 6.9%.
French construction firm Vinci earns the majority of its income from the design and construction of buildings (36%) and from infrastructure projects (20%) including roads and railways. On 1 February the company reported that it has won the contract to build 17 service structures along the southern section of the Line 15 of the Grand Paris Express, a €65m contract. The work, scheduled to take five years, began in January 2021.