An 11% in Net Asset Value (NAV) per share, a slowdown in leasing activity and the well-flagged cancellation of the interim dividend at Shaftesbury will all feed into the narrative that real estate is an asset class that it destined to underperform in the future as a result of the long-term implications of the COVID-19 pandemic, says Russ Mould, AJ Bell Investment Director.
“Such concerns could prove accurate, depending upon how slowly workers return to offices (if at all), the pace at which consumers return to shops, bars and restaurants, and whether there is a shift away from living and working in big city centres and toward the suburbs or smaller communities, even once the outbreak is under control.
“If the pace of recovery is very slow or a people begin to move away from commuting and toward working from home or living in the suburbs or more rural areas, then urban REITs like Shaftesbury could face further drops in asset values and rental income, which would in turn crimp the company’s ability to pay dividends to shareholders.”
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