Image source: © 2025 Krish Capital Pty. Ltd.

Highlights

  • Berenberg reiterates BUY rating with a target price of GBp 225, implying an 11.52% upside.

  • VIP’s property portfolio delivered a 9.0% total return vs 6.3% benchmark.

  • Dividend per share increased for 38 consecutive years; FY25 yield at 7.5%.

Value and Indexed Property Income Trust PLC (LSE:VIP), which recently transitioned into a UK REIT on 1 April 2025, has been assigned a BUY rating by Berenberg, highlighting analyst confidence in the trust's long-term performance. The target price of GBp 225 implies an 11.52% upside from the current share price of GBp 201.75.

Annual Performance and REIT Conversion Boost Sentiment

For the year ending 31 March 2025, VIP’s share price rose 6.9%, delivering a total shareholder return of 15.0%. Meanwhile, the property portfolio returned 9.0%, outperforming the MSCI UK Quarterly Property Index benchmark return of 6.3%. The trust also posted a NAV total return of 7.1%, reinforcing the resilience of its inflation-linked income model, with 97% of rent reviews tied to RPI (88%) or CPI (9%).

Dividend Track Record and Inflation Hedge Remain Cornerstones

VIP's dividend yield stood at 7.5% at FY25-end, with dividends consistently rising since 1986. The targeted full-year payout of 13.8p represents a 4.5% increase year-on-year. Backed by a 38-year record of dividend growth outpacing inflation, the company remains committed to increasing dividends at least in line with inflation going forward.

This is supported by a property portfolio designed for long-term, inflation-protected income, with leases structured to pass through cost-of-living adjustments.

Active Portfolio Management Enhances Value

During FY25, VIP disposed of six properties for £12.4 million—achieving a 5% premium over valuation and a net initial yield of 7.4%. In parallel, the trust acquired the Bridgemere Garden Centre investment for £16.5 million at a yield of 6.6%, rising to 7.8% in December 2025. The asset offers a 24-year unexpired RPI-linked lease, supporting stable cash flows.

With borrowings averaging 4.5% in cost and 96% fixed, VIP has maintained a conservative financing structure. A portion of its £15 million debt due March 2026 has already been prepaid, improving financial flexibility.