Why commercial property values have hit the floor

Not since the global financial crisis 15 years ago have UK stock market investors valued commercial property companies so lowly.

On average, shares in London-listed landlords are trading at a 24 per cent discount to their net asset value (NAV), the latest estimate of what their buildings are worth, Morningstar data shows. Simply put, investors are telling companies that they think their buildings are worth less than they are saying.

Commercial property values have fallen sharply over the past couple of years in response to higher interest rates, which have pushed up property yields. All else being equal, higher yields equal lower headline valuations.

Tritax EuroBox, the property company that invests in distribution centres across Europe, is being eyed up by Brookfield

The decline in values has been indiscriminate, although offices and shops have suffered the worst given the uncertain outlook for them.