The
number of profit warnings issued by listed real estate companies rose fivefold
in the first half of 2020 compared to last year, as Covid-19 forced investors
and REITs to reassess their forecasts.
EY’s latest Profit
Warning report tracked 24 profit warnings from 26% of the FTSE real estate
companies during the period.
There were 16 profit
warnings in Q1 and eight in Q2, compared to just six in 2019.
Some 36% of FTSE real
estate investment and service businesses issued warnings, compared to 19% of
REITs. This compares to an average of 33% across all companies.
Helen Pratten, EY
strategy and transactions partner, said: “Covid-19 bas been cited in all real
estate profit warnings as the pandemic exposed underlying structural weaknesses
and existing challenges.
“Bricks-and-mortar
retail is changing, and it is uncertain when students will return en masse to
universities or when hospitality will recover. Whilst a buoyant and successful
future is envisaged, the sector must plan and adapt whilst navigating the short
term.”