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June 20th 2023, London. The latest T200 reports from Income Analytics (INCANS) shows the UK hospitality tenants continuing to be the best improvers, albeit from a low base after the pandemic. However, their European counterparts have not shown as much improvement. European pubs & restaurant scores have remained static over the last 12-months. In the US however the same tenants are seeing falling scores. Perhaps discretionary spend has been hit harder in the United States. Motor dealerships, a representation of larger discretionary spending, has seen tenant scores (and therefore the likelihood of default) fall across all three regions.

Matthew Richardson, CEO and Co-Founder of Income Analytics commented “the security of income is at the forefront of our clients’ minds, and we’re pleased to be able to provide these headline market averages to help identify sectors most at risk.” 

The INCANS® T200 series of reports have been developed by Income Analytics using company level data provided by Dun & Bradstreet. The figures are calculated at the end of each quarter by generating an average % probability of failure for the top 200 companies in each of the 83 SIC 2 industry code type. Income Analytics provides reports for the UK, Western Europe and North America.

Download the reports here:

United Kingdom

Western Europe

North America

REITS are an important vehicle for many investors to access the durable, long-term income that commercial real estate delivers. The macro environment seems ripe for REIT success, yet values have been falling in recent quarters.

For the full article click here:

https://www.propertychronicle.com/the-problem-with-uk-reits/

November 28th 2023, London. A common theme across all our regional T200 reports is a recovery of the leisure sector tenants post-pandemic. They have bounced back from a low base, and typically record INCANS® Tenant Global Scores below their regional averages, but they are the fastest improvers.

The tenants typically occupying retail premises are stable across the regions. In our Western Europe report we note the fall of office sector tenant average scores for the first time in 12 months. Logistics have remained stable in the UK, or recovered slightly in Western Europe and North America.

To receive the full reports for each region, click the link below.

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With UK Retail Park mainstay Carpetright falling into administration, we thought it worthwhile to examine the credit risk across the top 20 UK retail park occupiers. UK Retail Parks attract a wide range of retail types and the top 20 include DIY specialists such as B&Q, discounters like B&M and Home Bargains, and grocers like J Sainsbury and Tesco.

Income Analytics’ give all companies an INCANS® Tenant Global Score from 1 to 100. These relate to a probability of default and predict the likelihood that a company will seek credit relief or fail, 1 being the worst. The unweighted aggregate score of the top 20 retail park occupiers is 74/100. To give this context, the UK retail average is 68 so the top 20 average is better than the wider market. It is bolstered slight by the presence of grocers who are typically stronger than general retailers, but DIY specialists also out-perform UK retail.

We also calculate the probability of default across this retail group, and we can compare it to corporate bonds to calculate an equivalent bond default risk. Unweighted, this group of 20 would have a default risk equivalent to BB+ i.e. borderline investment grade corporate bonds.

However, this is where it becomes important to look at the mix of risks across the top 20. It may surprise you. The left-hand chart shows the distribution of the risks across this group, with some occupiers facing a much greater probability of default than others. The right-hand chart shows the equivalent bond default risk across the same group. Just 1 of the top 20 fall into the Low Risk category, though good news for investors in this sector, 12 are Medium-Low Risk. That means 65% of the top 20 occupiers would be considered at little risk of defaulting on their leases. Landlords just need to worry about the remaining 35% who find themselves at more risk of struggling to meet their lease obligations in the future.

Landlords will want to ensure that are either managing their leasing to ensure they have the right tenants in place to minimise their income risk, have guarantees in place, or look to right-size the rent to get as close to risk-neutral as they can.

For decades there have been calls for a re-think on CRE valuations. Now with the perfect storm of a data revolution, shorter leases, more operating expenses, ESG and Covid, this is the time the property valuation community could finally accept that analysis of the income is more important than capital values.

After 30 years, several books, many papers, and hundreds of presentations, Oxford professor and real estate expert Andrew Baum’s penny has finally started to drop for valuers: analysis of income is more important than capital values. The perfect storm of technological advancements leading a global data revolution, increasingly shorter leases, increased operating leverage, ESG, and Covid have accelerated the need to understand the risks associated with a commercial real estate portfolio, which has now become paramount. “The current situation is more likely to bring significant change than any situation I’ve seen in the last three decades,” says Baum.

Read the full insight here: Capital Values Exit the Building, Analysis of Income Enters

The Income Analytics webinar on 10th February 2025, "Why Logistics Real Estate Leads the Way: Stability, Demand, and Resilience," explored key trends and investment strategies in the European logistics real estate market. Moderated by Income Analytics’ Matthew Richardson, Kevin Mofid from Savills, Theo Soeters from Edmund de Rothschild, and Peter Bingel from Boreal Investment Management provided expert insights into the sector’s stability, ongoing demand, and future opportunities.

Missed the webinar? Click here for a link to watch.

Below are some key takeaways from the webinar.

Market Overview & Trends:

• European logistics real estate has seen increased activity, particularly in the last 12 months.
• The sector remains stable, driven by demand from e-commerce, supply chain evolution, and macroeconomic shifts.
• The market is adjusting to structural changes, such as reshoring, nearshoring, and supply chain disruptions

Investment Insights:

• Investors are targeting core markets like Germany, France, Netherlands, UK, and Spain.
• A shift from big-box warehouses to mid-box and smaller industrial assets due to better yield premiums (100-150 bps higher).
• Strong interest in Western European logistics hubs with stable occupier demand.

Occupier Market Analysis:

• Logistics demand is primarily driven by retail (physical and online), grocery logistics, and supply chain efficiency.
• ESG (Environmental, Social, and Governance) has become a top priority for occupiers.
• Nearshoring and reshoring trends are expected to be long-term drivers of demand.

Financial & Economic Factors:

• Interest rate policies remain a key concern, with potential stabilizations in 2025.
• Investment volumes in logistics real estate increased by 11% in 2024 (Savills).
• UK logistics market faces higher financing costs compared to Europe, making European markets more attractive for investment.
• The yield gap over 10 year government bonds is also less attractive for investors in UK logistics property

Challenges & Risks:

• Supply chain disruptions (e.g., climate, geopolitical conflicts, trade policies) are reshaping logistics strategies.
• Cost pressures for occupiers include rising rents, labour, and energy expenses.
• Uncertainty in bond markets and potential inflationary pressures due to tariffs.

Missed the webinar? Click here for a link to watch.

A great deal is being written about the current banking crisis and contagion within real estate markets. The problems have their roots in the last great financial crisis of 2007/08. With that in mind, Income Analytics’ CEO, Matt Richardson, highlights how this should move investors to focus on income and its associated risks.

Read the full Risk Insight publication

Watch our video on how the tenant monitoring service works.

In this quarter’s INCANS Risk Insight, the overall theme is how data will be crucial for allowing us in

real estate to make better informed decisions.

Now, you might very well say to yourselves that this is a blindingly obvious point. And it is. But it’s one the industry has failed to take on board for decades despite data being acknowledged as a critical component for real estate for at least a decade.

Myself and the other founders of Income Analytics have all worked in and around real estate since the 1990s, and while much has changed in the industry it’s certainly fair to say that our industry has not embraced data to the same extent as financial services for example.But, finally the tide is turning far more towards the industry harnessing the power of data.

Read the full article here: INCANS Risk Insight Publication: Unlocking real estate’s data potential

We are pleased to announce that we have significantly upgraded our INCANS Asset Due Diligence product.

In addition to an improved interface, we now offer users the ability to edit the Tenancy Schedules of assets you have created previously.  This much requested feature gives you the ability to add, swap or remove leases in an existing asset, as well as correct any data entry mistakes you may have made.

Note that this is Due Diligence assets created by users only, not any shared portfolio data - which we will continue to manage for you as part of the service we provide.

Any questions you may have, please contact our team at info@incans.com