Investment Trust Dividends
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No coding required, if you can copy and paste you are good to go.
In time of trouble property can be a safer holding.
General guidance, not a substitute to DYOR.
Property values generally fall when interest rates rise as any future borrowing will be at a higher rate than current, therefore leaving less cash to payout in dividends.
You can buy property Trusts for discounted pounds.
Some Trusts post their NAV and therefore their discount to NAV is apparent, other REIT’s are companies and you need to compare their NAV value to their current capital value.
Any REIT with a progressive dividend policy may be worth researching around the 7% yield mark, especially if you are building a position with earned dividends as you don’t want the price to rise and the yield to fall until you have completed your buying.
RGL has been a very disappointing holding, leopards and spots but there is some research copied to the SNOWBALL which could, if you are an optimist, indicate that the worst is behind them.
AIRE, LABS are in a bid situation.
SERE has a French tax unresolved dispute, so DYOR.
NRR only pays two dividends a year, so there could be an opportunity to buy just before their xd date.
VIP sometimes trades on a wide spread.
etc., etc.
As the intention of the SNOWBALL is to hold forever, if you buy a property Trust and the value falls it’s of no consequence as long as the dividends are still paid.
An update for any new readers, according to the blog’s latest stats, there a few.
First port of call
Days of Yore: Royal Navy Crossing the Line Ceremony (Equator)
Read the Rules by typing Rules into the search box above.
The current fcast for the tax year which has just started is £10,500 of income.
The first quarter estimate is £2,728 which would equate to income for the year of £10,912.00 The fcast in an uncertain market remains £10,500.00
The SNOWBALL is currently well ahead of it’s plan.
A bedrock of stability
But some investors weather these things better than others. And I don’t mean those who flee to cash or bonds at the first sight of trouble. Making calls like that is very, very difficult – and even the professionals have only patchy records of success.
The investors I’m talking about are those investors whose portfolios – while they might drop – fall in value nothing like the fall experienced by the broader market as a whole.
Investors whose dividend income streams continue more or less unabated, experiencing only minor turbulence, if any.
Investors who sleep easily at night, and who don’t experience that ‘sick to the stomach’ reaction every time they switch on the news, or – worse – take a look at their investment portfolios.
And who are these investors, precisely?
Investors with a solid exposure to defensive shares, in short. They might not be ‘all in’ on defensive shares – everyone likes growth, after all – but they’ve got defensive shares at the heart of their portfolios, creating a bedrock of stability and resilience.
Steady as you go
So, what exactly are defensive shares? It’s not difficult.
Simply put, a defensive share is a business for which revenues – and profits – hold up pretty consistently, whatever the economic weather. Bad times, good times, and everything in between.
Clearly, that’s good news in bad times. Sales and profits continue to chug along, quite happily. Customers might be a little more price-sensitive, and perhaps not buy quite as much, but whatever the product or service that the business provides, they continue to rock up and buy it.
In short, whatever that product or service is, when it comes to customers’ budgets, it comes from non-discretionary spending.
Equally, though, there’s often less welcome news in good times. Those same customers don’t necessarily buy more of whatever it is. They might be a little less price-sensitive, and maybe buy a little bit more, but overall, demand remains fairly steady.
The charm of non-discretionary expenditure
So what sort of companies, exactly, comprise defensive shares?
The key here is to think of companies that sell products or services that come from their customers’ non-discretionary expenditure. People have to eat, for instance, so a supermarket such as Tesco is a good example of a defensive share.
Food manufacturing is also in the frame, especially where there’s a decent ‘moat’ involved: Tate & Lyle would be an example, too. Unilever fits the bill, too – although the recent sale of its various food businesses (think Knorr, Marmite, Colman’s and so on) takes some of the shine off. Nevertheless, the remaining personal care portfolio is still largely defensive.
Ditto companies in the pharmaceutical and personal care sectors generally. Global giant GSK was a superb example, and is still strongly defensive, but the various consumer toothpaste and over-the-counter brands that were hived off into Haleon were a distinct loss from the standpoint of its defensive qualities. AstraZeneca and Reckitt Benckiser are also superb examples of defensive businesses.
More generally, well-chosen Real Estate Investment Trusts can possess excellent defensive qualities. Primary Health Properties, for instance, owns and leases out doctors’ surgeries – over 1,100 of them at the last count. Tritax Big Box, too, is worth a look, owning and leasing out the vast distribution centres that power the supply chains of clients such as Tesco, Amazon, Sainsbury’s, Morrisons, and Marks & Spencer.
But enough: you get the idea, I’m sure.
Boring but dependable
So there we have it. In uncertain times, boring but predictable businesses that sell products or services that people dependably buy, whatever the economic climate, are a sensible underpinning for just about any portfolio – especially for older or more risk-averse investors looking for a decent income stream.
Until next time,
Malcolm Wheatley
Investing Columnist,
The Motley Fool UK
Apr 08, 2026 MRP, DRH, PINE, LEN.B, PINE.PR.A
Steven Cress, Quant Team
REITs outperformed the broader market in the first quarter of 2026, supported by discounted valuations, the rotation away from big tech, and improving expectations for interest rate cuts. Performance was pressured later in the quarter by elevated volatility tied to the Middle East conflict and shifting rate expectations, but most subsectors ended the quarter in positive territory, while 33 REITs have raised their dividends so far this year, some by double-digits.
Markets rallied and Treasury yields fell on Wednesday after the U.S. and Iran agreed to a conditional ceasefire framework, led by tech, industrial, and cyclical stocks. Any near-term rotation could create opportunities to buy REITs on the dip, while positioning for volatility tied to geopolitical developments and the upcoming midterm elections. In that environment, REITs can offer relatively steady income and potential downside resilience.
Reliable income, attractive valuations, and structural demand drivers are key reasons SA Analyst Brad Thomas believes it is time to overweight REITs, although he warned that not all REITs are created equal:
REITs are not a monolith. They are a collection of businesses – some average, some exceptional – and the key is to identify durable cash flows, strong management teams, competitive advantages, and intelligent capital allocation. As much as I love REITs, I would not recommend putting all your eggs in one basket.
Backed by tangible assets and contractual revenue streams, REITs can offer durable income to potentially stabilize a portfolio amid elevated volatility and sticky inflation. Investors seeking exposure to REITs can use Seeking Alpha’s quantitative tools to find investments offering solid yields supported by strong fundamentals.
Using Seeking Alpha’s REIT Screener, I identified 3 Strong Buy REITs showcasing strong AFFO growth, well-covered dividends, and diverse industry exposure. My three picks offer forward yields of 4.2% to 10.9%.
Seeking Alpha’s Quant REIT Ratings are generated by a proprietary model that analyzes more than 100 metrics for each REIT relative to sector peers and assigns grades across five factors: Growth, Value, Profitability, Revisions, and Momentum. The ratings incorporate key REIT-specific metrics such as FFO, AFFO, FAD, and gross properties. Separate Dividend Grades evaluate each REIT’s payout based on Safety, Growth, Yield, and Consistency relative to sector peers.
In the section below, I highlight context, recent developments, and key metrics supporting each REIT’s Quant Rating.
Spun out from homebuilding giant Lennar Corporation (LEN) in 2024, Millrose Properties is a homesite option platform for residential homebuilders with 142,139 homesites in its portfolio across 30 states. Targeting a total addressable market exceeding $170B, Millrose’s business model is benefiting from structural tailwinds as U.S. housing inventory remains near historical lows and homebuilders increasingly seek financing solutions to secure land.
MRP vs. S&P 500 Real Estate Sector (XLRE): 1Y Price Return
In FY 2025, its first year as a public company, Millrose navigated affordability headwinds and macro uncertainty to deliver 31,575 homesites while topping AFFO guidance as the structural need for housing capital remained unchanged. Invested capital outside the Lennar Master Program Agreement reached $2.4B, generating yields of 11.0%, while reporting zero option terminations across the portfolio.
Driven by a strong pipeline and improving backdrop, Millrose expects AFFO to grow by 10% in FY 2026, and invested capital outside the Lennar MPA to increase by an additional $2B, CEO Darren Richman said in the earnings call:
2025 was a defining year for Millrose. Despite a cautious homebuilding environment, we were embraced across the industry with a reception that exceeded even our own expectations, validating both the concept and our team’s execution. 2025 proved the model. 2026 is where we intend to begin showing its full potential. We believe we have the platform, the pipeline, the partnerships and the track record, and we are just getting started.
According to consensus estimates, Millrose FFO is projected to grow by nearly 30% in FY 2026, backed by bullish sell-side analyst revisions in the past 3 months. Strong FFO margins, cash flow, and return on capital drive an A+ Profitability Grade.
Millrose offers a dividend yielding 10.97%, which is expected to grow in the next two years, supported by strong cash flow generation and AFFO. Exceptional FFO interest coverage and conservative leverage underpin Millrose’s ‘A’ Dividend Safety Grade, which measures a company’s ability to continue paying the current dividend amount.
Although Millrose has increased its dividend each quarter since initiation, its relatively short payout history weighs on the Dividend Consistency Grade. However, the score is likely to improve as the company establishes a longer record of payments. Millrose is trading at a 43% discount to the sector based on a forward price-to-AFFO of 8.6x vs. the sector’s 15x for an A+ Valuation Grade. A high yield, robust AFFO, and strong growth prospects make MRP my top REIT pick.
DiamondRock Hospitality owns 35 premium quality hotels concentrated in urban gateways and resort destinations under leading global brands such as Hyatt, Marriott, and Hilton. The portfolio covers 26 geographic markets with 45% of EBITDA deriving from the top five: Boston, Chicago, New York City, the Florida Keys, and Fort Lauderdale.
DRH has crushed the market in the past year, alongside top small-cap peers, driving an A- Momentum Grade, as leisure demand remains robust and consumer spending resilient. DRH dipped after the conflict in the Middle East escalated, offering a buying opportunity as it trades at an attractive valuation.
DRH 1Y Price Return
Stronger than expected transient demand and out-of-room spending, offsetting the impact of the government shutdown, helped drive growth in RevPAR, FFO, and net income in FY 2025. Although the political and economic backdrop warrants caution, DRH sees several favorable factors supporting a positive outlook in 2026, including key markets hosting the majority of FIFA World Cup matches, America 250 celebrations, and post-renovation tailwinds.
FFO is expected to grow steadily in the next three fiscal years while strong cash flow and AFFO drive an A- Growth Grade, along with a dividend that surged by a CAGR of 60% in the past 3 years. DRH offers a safe dividend yielding 4.25%, supported by payout ratios significantly lower than the sector and solid interest coverage.
DRH is trading at only 9x forward AFFO for a solid Valuation Grade, supported by attractive trailing EV/EBITDA and price/rental revenue multiples relative to sector peers. DRH is a solid addition to my Strong Buy REIT basket, showcasing a visible FFO growth path and well-positioned to ride industry tailwinds in key markets in 2026.
Alpine Income Property Trust owns and operates 127 net lease properties in 33 states, featuring top franchises such as Lowe’s Companies, Inc. (LOW), DICK’S Sporting Goods, Inc. (DKS), and Walgreens. Alpine offers a stable income profile, supported by a 99.5% occupancy rate with a Weighted Average Remaining Lease Term of 8.4 years.
PINE 1Y Price Return
PINE grew AFFO by 22.7% YoY in Q4 2025, and +8.6% for the full-year, while completing a record $277.7M in investments, including $177M in commercial loan originations and $100.6M in 13 property acquisitions. Annual revenue grew by 15.9% YoY to $60.5M, primarily driven by a sharp increase in interest income from commercial loans and investments alongside modest growth in lease income.
PINE FY 2025 Revenue by Segment
According to company guidance, Alpine expects even more growth in 2026, with AFFO estimated to increase by double digits. The results contributed to strong forward AFFO growth, driving an ‘A’ Growth Grade, supported by bullish long-term FFO estimates from sell-side analysts. PINE offers a fast-growing and consistent dividend yielding 6.53% with a 5Y growth rate of +6%. It is projected to continue growing for the next three fiscal years, adding support to an A- Dividend Growth Grade. PINE has paid out a dividend for six consecutive years – including 6 straight years of growth.
Despite surging momentum in the past year, PINE is trading at 8.7x forward AFFO, driving an attractive valuation. PINE wraps up my basket of Strong Buy REITs for volatile markets, showcasing strong collective fundamentals, high growth, and solid yields.
REITs were crushing the market to start off the year, supported by hopes of easing interest rates and a rotation out of stretched tech stocks. Although returns were compressed by the volatility fueled by the Iran war, most REIT subsectors finished Q1 2026 in the green, outperforming the broader market. REITs can offer durable cash flow streams and a potential hedge against inflation, but investors should ensure dividends are backed by strong fundamentals. SA Quant identified three REITs with strong AFFO growth and average dividend yields of around 7%.
Renewable Energy Infrastructure Inv Trust 80.3%
UK Equity Income Inv Trust 10.3%
Property – UK Commercial Inv Trust 8%
Debt – Direct Lending Inv Trust 1.4%
The SNOWBALL is currently overweight in Renewables as that is where the current high yields are available. With several Trusts declaring they are winding down/up, this may prove a problem in the long term. In the short term, it could be a positive as more investment cash chases fewer opportunities.
The market wisdom is that when the perception is interest rates are rising property and debt are two sectors to avoid, although if prices fall and yields rise it could be an opportunity to avoid ‘secure’ yields above 7%
Equity Income as it yields below 7%, the SNOWBALL will maintain the current percentage.
SDCL Efficiency Income Trust plc
(“SEIT” or the “Company”)
Strategic Update and Announcement of Proposed Sale of Portfolio Assets and Proposed Managed Wind-Down
The Board is today providing an update to all its shareholders following a recent consultation with a number of its shareholders with respect to the appropriate strategic direction for the Company.
As stated in the Company’s interim results announcement on 8 December 2025, the Board has prioritised finding a solution that delivers value to shareholders and has considered a variety of potential solutions. One of the key priorities for the Board has been seeking to sell investments to reduce gearing and improve liquidity. This has proved challenging, notwithstanding that the Company was recently able to announce the disposal of a diversified portfolio of operational and yielding energy efficiency infrastructure assets for a total enterprise value of up to £105 million on 20 March 2026. The agreed price represents a discount of c.9%[1] to the carrying value of the portfolio as at 30 September 2025. The disposal process took longer than anticipated and illustrates some of the challenges of making disposals at reasonable valuations in the current market.
Given these challenging headwinds, the Board and the investment manager, Sustainable Development Capital LLP (the “Manager“), have been considering alternative solutions that could address the current discount to prevailing net asset value at which the Company’s shares trade, including through a strategic realignment of the Company, which could create a credible path to value creation for shareholders over the medium to long term without the need to dispose of assets in a difficult market. It was against that backdrop that the Manager, supported by the Board, developed a strategic proposal (the “Strategic Proposal“), which comprised:
· transferring the Company’s listing from an investment trust to a vertically integrated operating company, enabling better access to capital to preserve and deliver value as an energy services platform;
· a strengthened leadership team to scale the business and drive operational performance;
· an acquisition of the relevant assets of the Manager, including the transfer of the relevant employees, with the majority of consideration payable in new SEIT shares;
· a stronger platform for future growth, including material synergies;
· a waiver of the Manager’s termination fee;
· a transfer of the Manager’s growth-oriented data centre energy platform, which is not available to SEIT shareholders today, under an earn-out structure with no up-front cost paid by the Company;
· a re-calibration of the year 1 dividend to position the Company for growth; and
· a potential future equity capital raise through a pre-emptive placing of new SEIT shares to de-lever and fund accretive growth opportunities, supported by General Atlantic as a cornerstone investor.
Over the last 10 days, the Board and the Manager have been involved in extensive discussions with a number of SEIT’s shareholders regarding the Strategic Proposal to ascertain their views.
Whilst the Board believes that the Company could potentially deliver value significantly in excess of the current share price in the medium to long term through the implementation of the Strategic Proposal, it also acknowledges that there is execution risk associated with this transformation and re-positioning of the Company. During the recent shareholder engagement, a significant number of shareholders expressed a clear preference for liquidity rather than the Strategic Proposal, notwithstanding the material risks to achieving value in a reasonable timeframe associated with a liquidation of the Company’s portfolio in the current challenging market backdrop.
Following this engagement, it is clear to the Board and the Manager that there is insufficient support from shareholders to pass the special resolution required to successfully implement the Strategic Proposal.
The Board remains focused on delivering shareholder value and has carefully assessed all actionable options currently available to the Company to achieve that objective. Accordingly, the Board has unanimously concluded that it is currently in the best interests of its shareholders, as a whole, to pursue a managed wind-down of the Company’s investment portfolio (the “Managed Wind-Down“). The Board will give consideration as to how best to ensure the Company is able to continue operating its ordinary activities, whilst ensuring that it can deliver shareholder value through disposals and ultimately a full liquidation of the Company’s portfolio. The Board remains open to proposals for any, or all, of the assets of the Company’s portfolio.
The Board now intends to agree appropriate arrangements to effect the Managed Wind-Down and align economic interests towards monetising assets. The Board and the Manager have agreed in good faith to minimise any termination fees that could potentially be payable to the Manager, on the basis that if termination does occur, the Manager’s contractual notice period would be deemed to have commenced on today’s date.
The Board wishes to express its sincere appreciation to its shareholders for their recent engagement and constructive discussions. Moreover, the Board would also like to express its gratitude for the perseverance and support that shareholders have demonstrated through what the Board recognises has been, and continues to be, a very challenging time for the Company.
Further information
The Board will commence a process to evaluate the appropriate management arrangements of the Managed Wind-Down process shortly. In due course, the Board will announce the requisite changes required to the Company’s policies to facilitate a successful Managed Wind-Down and return of capital to shareholders over time. Further details will be announced as and when appropriate.
Tony Roper, Chair of SEIT, commented:
“Since the material increase to interest rates in late 2022, the macro environment and investment trust landscape has become increasingly challenging and it has become clear to the Board that SEIT, like a lot of its investment trust peers, can no longer deliver returns that are acceptable to shareholders in its current structure and the status quo is not viable.
The Board is acutely aware of the reduction in share price in recent years and we recognise the frustration and uncertainty this has caused. We have listened carefully to the views expressed in our recent shareholder engagement and are grateful for the constructive dialogue and candour shown throughout.
Having considered a wide range of options, and in light of the clear preference for liquidity in addition to value, the Board believes that proposing a managed wind-down is the most appropriate course of action to seek to deliver value and provide shareholders with a clearer path to realisations, notwithstanding the execution challenges of achieving this objective in the current market environment.
We will continue to engage closely with shareholders as these plans evolve in the coming months.”
Brett Owens, Chief Investment Strategist
Updated: April 7, 2026
I know uncertainty is the word on everyone’s mind these days, but is this level of terror actually justified?
Source: CNN
Short answer: Nope.
In fact, we contrarians are more nervous when our CNN Panic-O-Meter hits “Extreme Greed!” Times like these are when we go shopping. And closed-end funds (CEFs) throwing off 8%+ dividends are a great way to do it, since many are in the bargain bin as we speak.
We’ll talk two tickers (paying dividends north of 10%) in a sec. First, here’s what the mainstream crowd is missing—and why it’s teeing up these 10% income opportunities.
First, the Iran War has thrown AI off the front pages—and once again, the crowd is overlooking just how much this tech stands to “amp up” productivity (and profits!).
It’s already happening.
Take the latest stats from FactSet, which released its earnings projections for the just-completed Q1 on March 27. In all, they’re calling for 13% growth. That would be the 11th straight quarter of growth and the sixth straight in double-digits.
And it pales in comparison to what they see for the full year: 17% profit growth. Seventeen percent!
Every day, we hear more and more cases of AI driving real profits (including at my own software business, where I’ve been able to cut costs by 70% while growing revenue).
In other words, the ’bots are a two-stage rocket for stocks, boosting growth on one hand, while capping spending (and by extension interest rates) on the other.
And the market is pricing stocks, and CEFs that hold them, as if none of this is happening.
Which brings me to those two 10%+ paying CEFs. The current panic has made both—one focused on stocks and the other on bonds—bargains. But their current discounts price in a far worse situation than we’re likely to face.
CEF #1: A 10.7% Payer With a Discount in Disguise
The Gabelli Equity Trust (GAB) doesn’t look cheap at first glance, trading at a 0.9% premium to net asset value (NAV). Here’s why that’s misleading: Over the last five years, GAB has averaged a 7.1% premium—far higher than today’s level.
The last time GAB’s premium got this low was in late October 2024. If you’d bought then and held till the premium peaked north of 11% on December 31, 2025, you’d have bagged a tidy 29% return, way ahead of the S&P 500:
GAB’s Premium Surges, Inflates Its Return
What’s more, the fund’s dividend (which yields 10.7%) has been growing, and GAB has dished out the odd larger-than-normal payout (the longer lines in the chart below):
GAB Taps Well-Known Stocks for a Growing 10.7% Payout
Source: Income Calendar
Beyond the “deal” on the fund itself, we’re getting a bargain on its holdings, which are proven cash flow generators caught up in this quarter’s chaos, including MasterCard (MA), American Express (AXP) and waste manager Republic Services (RSG).
One last thing: GAB is in the midst of a rights offering as part of its 4oth anniversary. Under the deal, existing shareholders get rights that let them buy more shares of the fund at $5 each—below the current price.
New shareholders can’t get on this, but the offering is no doubt weighing on GAB’s share price. Once it passes, that pressure is likely to reverse, as it has with other CEFs in the past.
CEF No. 2: an 11.7% Payer That’s Cheaper Than It Was in 2022
We last discussed the PIMCO Corporate & Income Opportunity Fund (PTY) a couple weeks back: in a March 17 article. I bring it up now because the fund’s “hidden” discount (in the form of a 6.5% premium at the time) has slipped to 5.6%.
That’s cheaper than PTY was during the 2022 inflation panic—when CPI hit 9%! No forecast has us anywhere close to that this time around.
Like GAB, PTY usually trades at a premium, and a wide one: Over the last year, that premium has averaged around 14.8%, way above today’s level. (If you’re wondering why the premium exists at all, it’s because PIMCO, founded by legendary bond investor Bill Gross, has long had a grip on investors’ imaginations.)
One reason why the fund’s premium has shrunk is likely because of the long effective maturity on its credit assets: just under eight years. That’s important because longer-duration bonds fall when rates rise (something the current crisis is fueling fears about) and do better when rates fall.
But even if rates do rise, it’s more than priced in.
The crowd is also ignoring PTY’s effective leverage-adjusted duration of 3.8 years. That positions it for gains on lower rates without adding too much risk if rates rise.
And as with GAB, the power of buying at a low premium like this is clear. If you’d gone counter to the crowd and bought PTY at the depths of the 2022 panic, you’d be up a solid 31% today—a big move for a bond fund and well ahead of the benchmark State Street SPDR Bloomberg High Yield Bond ETF (JNK):
The Power of Buying a Discounted CEF
Reinvested dividends drove most of that return, thanks to PTY’s huge monthly payout.
A Reliable Double-Digit Divvie
Source: Income Calendar
Despite a slight cut during COVID, PTY’s payout—11.7% as I write this—has held steady for years. And besides, its regular special dividends (the spikes and dips shown above) have gone a long way toward making up for that cut.
I expect that to continue as the wind shifts toward lower rates, inflating PTY’s premium back to its usual double-digit level. That could happen fast, especially with a steady 11.7% payout in play.
The One Income Plan Built to Pay $40K+ in Dividends (It’s on Sale Now)
If you’ve been reading my articles for a while, you know I’m a fan of a “dividends-only” retirement.
The goal? Simple: Build a dividend stream that covers your bills. Then you can sit back, collect your payouts and ignore market storms like this one.
Most people think this is impossible. They look at the sad yields on the typical S&P 500 stock and think they’ll never save enough to make it happen.
That’s a mistake. The two CEFs we just discussed prove otherwise. With 10.7% (and up) dividends, they show it doesn’t take millions to generate real income.
That’s the foundation of my $500K “Dividends-Only” retirement portfolio. It’s a simple mix of “battleship” stocks and funds built to kick out real income: $40,000, $50,000 or more in dividends every year.
The Iran panic has made this portfolio cheaper, but that won’t last: As AI ripples through the economy, capping wages and dragging down rates, big, steady dividends like these will only get more valuable. That’s why we need to move now.
The SNOWBALL has received it’s first dividend of £212.00 for the tax year 26/27.
Cash for re-investment £456.00
The ‘PACE’ Reits that protect you from AI disruption
By Hugh Moorhead
Investors’ Chronicle
The past year has been a blockbuster one for fans of financial market acronyms. Taco, which stands for ‘Trump always chickens out’ and dominated much of 2025, continues to cause investors whiplash as they follow developments in the Middle East.
More recently, Halo (‘heavy assets, low obsolescence’) emerged as a way to describe sectors that are less vulnerable to the perceived AI threat than those such as software.
A variation on this second theme is Pace (‘physical assets, compounding earnings’), which entails not just owning complex, tangible assets, but astutely operating them to consistently grow shareholder earnings and dividends.
“If Halo offers insulation from AI disruption, Pace may offer progression, and compounding,” says Matthew Norris, manager of the Gravis UK Listed Property fund, who coined the acronym.
The UK’s listed real estate sector offers some pertinent examples. Primary Health Properties (PHP) operates a £6bn portfolio of GP surgeries and private hospitals in the UK and Ireland. These assets will remain essential infrastructure irrespective of what is happening in the broader global economy, and should be resilient to AI disruption, at least in the near term.
Two-fifths of PHP’s portfolio earns rents that are indexed to inflation or subject to fixed uplifts, albeit with many subject to ceilings as well as floors. The remainder are reviewed on an open-market basis, typically every third year, overseen by an independent district valuer.
The UK and Irish governments, unlikely to default on rents, account either directly or indirectly for three-quarters of PHP’s rental income.
“We have a very secure income stream and very stable asset class,” chief executive Mark Davies told Investors’ Chronicle on results day on 17 March.
The upshot of this security is that PHP is set to increase its ordinary dividend for the 30th consecutive year in 2026, and openly covets ‘dividend king’ status (50 consecutive rises).
Rents on smaller peer Target Healthcare Reit’s (THRL) £900mn portfolio of care homes are wholly indexed to inflation, again providing investors with protection should the conflict in the Middle East result in a persistent inflationary increase. This is also the case for Social Housing Reit’s (SOHO) £600mn portfolio of supported housing.
Target’s rental mix is far more weighted to the private sector. Yet the company argues that such tenants can more easily pass on rising costs, such as increases in the minimum wage, to customers.
In any case, its tenants’ rent cover – their ability to pay rents out of underlying operating profit – is very healthy, at just under two times.
A final example is LondonMetric (LMP). Its £7.4bn portfolio largely consists of ‘mission-critical’ assets, such as logistics premises, convenience stores and private hospitals.
Its tenants sign long-duration ‘triple-net’ leases, where the tenant takes responsibility for property taxes, insurance and maintenance costs. Two-thirds of its rental income comes from contracts indexed to inflation or with fixed uplifts. The company has doubled its ordinary dividend in just 13 years as a result.
Not all of its portfolio is as defensive, however, with 20 per cent comprising leisure assets such as hotels and theme parks. The company likes these because they are difficult to replicate and play into consumers’ growing preference for experiences over goods, but their tenants could still run into trouble if those consumers were to aggressively tighten their belts during an economic downturn.
While these companies’ physical assets and income streams should leave them well-placed to grow earnings regardless of any wider economic or technological disruption, investors should also bear in mind the outside risk of rising rates – and debt costs – impounding the compounders.
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