Schroder European Real Estate Investment Trust (Reit) has reported a fresh decline in the value of its property portfolio, underscoring the mounting pressure on Europe’s commercial real estate market as the company prepares to embark on a managed wind-down aimed at maximising shareholder returns. The group’s independently valued portfolio fell to €185.1m (about R3.45bn) by end-June, down from €192.6m three months earlier, representing a 3.9% quarterly decline.The latest valuation reflects continued weakness across European investment markets, particularly in secondary office assets, where higher borrowing costs, persistent inflation concerns and macroeconomic uncertainty continue to weigh on investor appetite. (Dorothy Kgosi) “The decline in valuations reflects weaker investment demand, particularly for secondary offices, driven by heightened macroeconomic uncertainty alongside inflation and interest-rate concerns. These factors resulted in further outward yield pressure and more conservative valuation assumptions,” the group said.The sharpest write-down came from the trust’s office building in Saint-Cloud, Paris, where the asset lost 11% in value after valuers increased the exit yield and discount rate by 100 basis points to reflect weaker market evidence. The property now carries a net initial yield of 9.5%, highlighting what the company described as the increasingly polarised nature of European office markets.Other office assets also came under pressure. The Hamburg office property value fell 4.5%, after a 50-basis-point increase in the discount rate, while the Stuttgart office shed 4.2% after a 25 basis point rise in the discount rate.Industrial assets proved relatively more resilient but were not immune. The Rumilly property in France fell 4.7% after higher forecast capital expenditure was incorporated into the valuation to improve the building’s sustainability credentials. The Rennes industrial asset declined 4.2%, reflecting increases in the exit yield and discount rate as valuers adjusted assumptions of softer market conditions.Meanwhile, the mixed-use data centre in Apeldoorn recorded a more modest 3.7% decline. The group said previous valuations had already factored in telecommunications tenant KPN’s planned departure at end-2026, meaning the latest reduction reflected only the shortening of the remaining lease term.The valuation update comes just weeks after the Reit announced its intention to seek shareholder approval for a managed wind-down of the business, signalling the end of the investment vehicle after years of challenging conditions across European commercial property markets.“The board intends to present formal proposals to shareholders for a managed wind-down of the company, with the process expected to take approximately two to three years to complete,” the group said.Rather than pursuing a rapid disposal of assets, the board said the phased approach will allow sufficient time to undertake targeted asset management initiatives, strengthen liquidity and reduce execution risk before properties are sold.“This timeframe provides flexibility to … maximise shareholder value,” the group said.Business Day