New Star's UK Property Unit Trust has been rocked today as a new valuation downgraded its portfolio by 8.2%.
The latest CB Richard Ellis valuation follows a 9.6% capital fall in the previous four months, taking the total capital loss to 17.8% since the end of July.
New Star says it “regrets” the property value reduction and will make every effort to maintain the fund’s liquidity.
At the current valuation, the income yield on the £1.99bn fund is 4.4% net of charges.
“Notwithstanding the quality of the fund's portfolio, its valuation must reflect the recent deterioration in sentiment towards the commercial property market generally,” the New Star statement to the stock exchange reads.
“The fund's property portfolio is being valued at least twice each month until the property market returns to a more stable state.
“In this way, property values will be kept as current as possible so that all unit holders are treated fairly, both those redeeming and those remaining as long term holders."
New Star says the fund will be well positioned when commercial property values rebound.
“Vacancies are currently less than 1% and 91% of the rental income received by the fund is paid by tenants that are categorised by Dun and Bradstreet as low, very low or lowest risk,” it states.
“The prospects for rental income growth from this portfolio have not, we believe, changed materially since mid-summer.”
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