The PIN Fund made a quarterly return of 2.7% in Q2. This was less than the average for the FTSE 100, which increased by 4.9% during the same period. Half of our Fund consists of UK housebuilders and they collectively made a loss of 3.2% in the second quarter (more on housebuilders later).
However, double-digit returns were achieved by Rightmove (12.6%) and both of our self-storage providers – Big Yellow (16.9%) and Safestore Holdings (19.8%), with the latter the best performer in Q2.
As can be seen in the table below, Whitbread (-8.7%) did not have a good second quarter mainly due to the postponement to the end of restrictions in the UK by one month, thanks largely to the rapidly spreading Delta variant of Covid-19. However, Whitbread is still up 41% since entering the Fund 12 months ago and I think we can all agree that we feel better about the state of the pandemic today than we did last summer.
Taking Whitbread out of the equation, the table reveals that the best performer over a multi-year period is Safestore Holdings, which has returned an incredible 35% per year on average, since entering the Fund at the end of September in 2016 (on the back of Brexit and the chaos we assumed it would bring…little did we know then that a bigger problem was around the corner).
You can read a much more detailed article on the self-storage sector on page X, but before I spend the rest of this article looking at the prospects for housebuilders it is worth mentioning that Safestore has raised earnings guidance twice since the start of the year on the back of a steep rise in occupancy.
In February, management announced that earnings this year are likely to be at the top end of market expectations before revealing in May that adjusted diluted EPRA earnings would be in the range of 37p to 38p a share, equivalent to annual growth of around 25%. This bullishness prompted a rush in analyst upgrades and positive forecasts not only for this year, but also for 2022 and 2023.
The group’s strong pandemic performance has been driven by an acceleration in the level of space let within the core UK operations which account for three-quarters of group revenue. By the end of April, occupancy stood at 82.4%, up on 70.6% at the same point last year.