TR Property Investment Trust PLC on Monday reported increased first-half profit and said it sees a recovery in the real estate market as interest rates begin to fall.

The London-based investment trust offers exposure to companies involved with UK and European commercial real estate.

Net asset value per share increased by 7.7% to 378.61 pence on September 30 from 351.50 pence on March 31. NAV total return for the six months was 10.9%, outperforming the company’s benchmark, the FTSE EPRA/NAREIT developed Europe capped net total return index, which returned 9.3%.

Pretax profit for the half year multiplied to £119.7 million from £31.1 million year-on-year, as total income multiplied to £129.2 million from GB44.0 million.

TR Property maintained its interim dividend at 5.65p per share.

The company said that it is seeing a recovery, with revenue earnings per share up by 12% year-on-year to 8.16p from 7.31p. However, the company said this is still ‘significantly below’ the September 2022 level of 12.05p.

It said it expects the ‘improving trend’ to continue through the second half of the financial year, but it will take time to build earnings back to previous levels.

Chair Kate Bolsover said the ‘various false dawns’ around reaching the peak in the interest rate cycle were over and the focus on ‘how many cuts and when’ has boosted real estate equity prices.

Bolsover said: ‘The rapid rise in interest rates over the last three years led a number of our companies to pause dividend payments but these are starting to pick up again. Falling interest rates are helping to reduce borrowing costs, which in turn supports real estate values and boosts income. We needed patience for the peak in interest rates and the focus has now shifted to further rate cuts, with attention on their timing and scale. This progress reinforces our confidence in the future.’

Fund manager Marcus Phayre-Mudge said: ‘We are seeing an encouraging, albeit bumpy, recovery in listed real estate. Demand for top-quality properties is outstripping supply in nearly all sectors. Over this period, there has been a positive shift in sentiment...However, we remain in a divided market: the best buildings in prime locations are attracting strong tenant demand, while others are struggling. This bifurcated environment supports TR Property’s investment approach and appeal given our underlying asset exposure.’

Shares in TR Property Investment Trust were down 0.2% to 317.75 pence in London on Monday morning.

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