Full occupancy and strong portfolio outlook

The interims from RAV confirm momentum building behind portfolio values as lower vacancy rates drive growth in RUB rents. Period-end portfolio occupancy at 93% (FY20: 94%) has since increased to 96%, a reflection of a tight underlying market, limited supply, and strong tenant demand.

Underlying earnings were £17.3m (H1 20: £10.4m loss), IFRS profit £41.6m, including unrealised revaluations (H1 20: £31.7m loss). A £29.5m mid-year revaluation surplus (H1 20: £12.5m loss) was a component of 10p growth in diluted NAV/share to 50p since end FY20.

RAV has effectively completed a series of initiatives which have stabilised its underlying finances in its functional currency and simplified its equity structure. In H1 21 it repurchased a substantial share overhang at 21.6p (ordinary shares) and 90.8p (prefs).

An attractive total return outlook is underpinned by the prospect of further underlying NAV growth from a near ideally placed portfolio, yet the Ordinary shares stand 46% below end of June NAV/share, and are supported by a 7.4% prospective yield. That discount should narrow if the second half sees some stabilisation of the political backdrop and firmer RUB/GBP. As an alternative, the Cumulative Preference Shares provide exposure to the core property case and an assured 10.7% yield.