UK REITs face an £18bn refinancing wall through the end of 2027, with debt written at sub-3% coupons rolling into a 5%-plus world. The sector's average interest cover remains comfortable at 3.1 times, but the range is wide — and it is the bottom quartile that will set the headlines.
The diversified majors have already termed out; it is the smaller specialists, particularly in offices and retail, where dividend cover falls below 1.2 times on refreshed debt costs. Two mid-cap names cut distributions last quarter, and consensus expects at least three more.
"The market has priced the refinancing wall into the discounts. What it has not priced is who climbs it first."
For income investors, the discipline is unglamorous: read the debt maturity schedule before the dividend yield. The sector trades at an average 19% discount to NAV — cheap by history, but the average conceals both genuine value and value traps.
