Why many wealth managers have missed out on the Reits revival 

While markets have ploughed on in the face of Donald Trump’s tariffs and the escalation of war in the Middle East, a niche yet vitally important part of the UK market is undergoing somewhat of a radical shake up.

Real Estate Investment Trusts (Reits) have seen a remarkable flurry of activity since the start of the year, culminating recently in the saga for control of Assura – a Reit which owns many of the properties used by GP surgeries.

This takeover battle is fast becoming a story worthy of a daytime soap opera.

A tie-up between Assura and its listed peer Primary Health Properties has been on the cards for years, although both management teams have always batted away questions on the subject. Then came a cash bid from US private equity giants KKR.

After a lot of back and forth and various counter offers, the deal remains on a knife edge with one good or bad session of trading enough to swing the bid price one way or another.

At the time of writing, Assura’s board has backed the latest PHP bid, although given events to date there may yet be another twist in this tale to come.

While it might be the most dramatic, the Assura situation is not the only corporate activity taking place within the Reit world. In fact, it is one of five significant bids which are either ongoing or have closed since the start of 2025, representing almost £4bn of share capital so far.

But what has this got to do with the managed portfolio service (MPS) market?

Well, following the well-known liquidity issues experienced by traditional ‘bricks and mortar’ UK property funds over the past decade, Reits have been pretty much the primary way to gain exposure to commercial property.

While some property funds are still in existence, albeit often in an altered form, and can have a role to play within managed portfolios, the liquidity and breadth of exposure on offer from Reits makes it an attractive consideration.

But unfortunately, a lot of investors are missing out on the flurry of corporate activity we are seeing in the Reit space.

According to Platforum data, ‘investment trusts only feature in the models of about a third of wealth managers.’ There are two reasons why this may be the case.

Firstly, due to being listed vehicles, Reits can exhibit more volatility than their open-ended, direct property fund equivalents. Depending on the make-up of a portfolio, Reits may not be a viable option due to the added volatility.

However, the bigger issue remains the means of accessing and trading these investments, particularly on platforms. Despite being a mainstream investment vehicle, there are still a handful of platforms that do not enable investment trusts to be held within models or be traded in a consistent, cost-effective manner.

The Association of Investment Companies puts the size of the investment trust market at £263bn – a huge section of the investible universe that many investors are potentially missing out on.

We have seen elements of innovation in the MPS market in order to fix some of these challenges.

Some firms, ourselves included, have launched core open-ended funds exclusively for use within their own portfolios, that allow them to selectively and successfully invest in investment trusts, regardless of platform functionality.

This is all very relevant just now as a result of the UK Reit market.

This latest wave of private equity interest in the sector appears to have helped awaken Reits from their slumber. Of the six large cap UK Reits, all except Segro are up year-to-date, despite the tumultuous market backdrop prompted by April’s so-called Liberation Day.

Of the main protagonists in the most recent battle, Assura is up 31% this year while PHP is up 4.3%. And there could be more to come. 

Most Reits are still trading at big discounts, and crucially, the property cycle appears to have renewed as well, with commentators forecasting positive capital value growth across most commercial sectors in the medium term.

Regulatory scrutiny of the MPS market is growing, and investment selection is likely to be on the FCA’s agenda. Providing the means to gain exposure to such opportunities ultimately improves investor diversification, opening up asset classes that continue to provide attractive characteristics.

This flurry of Reit corporate activity is rewarding investors nicely. But with a lot of MPS providers still not allocating efficiently, or even at all, to investment trusts, many are missing out.

Simon Doherty (pictured) is head of managed portfolio services at Quilter Cheviot