| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.8% | -1.4% | 4.9% |
Baron Real Estate Fund generated a 5.19% return in 2025, outperforming the MSCI US REIT Index's 1.68% gain, though trailing the broader market due to interest rate headwinds and housing market slowdown. Portfolio Manager Jeff Kolitch believes real estate is at a positive inflection point with compelling risk/reward as key concerns are now reflected in share prices. The fund's differentiated approach invests 73.4% in non-REIT real estate companies and 25.1% in REITs, targeting faster-growing companies beyond traditional 4-5% REIT growth rates. Key investment themes include commercial real estate services, data centers benefiting from AI demand, travel companies capitalizing on experience-over-goods spending trends, and housing-related companies positioned for long-term demographic tailwinds despite near-term affordability challenges. With new supply collapsed 50%+ from 2022 peaks, balance sheets strong, and potential for lower long-term rates, Kolitch expects double-digit annual returns ahead through growth, dividends, and valuation expansion. The fund maintains its #1 Morningstar ranking since inception.
Real estate is at a pivotal moment and the doorstep of a positive inflection, with compelling risk/reward as concerns about higher rates, refinancing challenges, and empty offices are largely reflected in share prices, while demand conditions remain steady with expectations for growth improvement.
As we peer into 2026, we are optimistic about the prospects for public real estate and the Baron Real Estate Fund. We believe the conditions are in place for much of real estate to perform well in the year ahead with steady demand conditions and expectations for growth improvement in the next few years.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 23 2026 | 2025 Q4 | AMH, AMT, BX, CSGP, DHI, FBIN, GDS, GMG.AX, H, HLT, IRM, JLL, PLD, RKT, SKY, TMHC, TREX, VNO, VTR, WELL | Commercial, Data centers, Housing, Industrial, real estate, REITs, Travel |
JLL PLD H CSGP SKY FBIN WELL VTR IRM |
Fund invests in leading commercial real estate services companies CBRE, JLL, and Cushman & Wakefield that benefit from outsourcing trends, institutionalization of commercial real estate,… |
| Oct 21 2025 | 2025 Q3 | AAON, ABNB, AMT, CBRE, CRH, IRM, JLL, WYNN | Housing, infrastructure, Property tech, real estate, REITs |
WYNN AAON FND WYNN AAON FND |
The fund outperformed benchmarks, supported by strength in REITs, homebuilders, and travel-related real estate. Management sees real estate entering a recovery phase as supply tightens,… |
| Aug 22 2025 | 2025 Q2 | ABNB, AMT, BAM, BN, BXP, CHDN, CSGP, EQIX, EXP, GDS, IRT, PLD, WYNN | Balance Sheets, interest rates, real estate, REITs, rents | - | The commentary discusses public real estate equities amid higher interest rates and uneven property fundamentals. Management focuses on high-quality REITs with strong balance sheets, embedded… |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Commercial Real EstateFund invests in leading commercial real estate services companies CBRE, JLL, and Cushman & Wakefield that benefit from outsourcing trends, institutionalization of commercial real estate, and market share opportunities in a fragmented industry. These companies are expected to generate 15%+ annual earnings growth as commercial real estate sales and leasing activity rebounds. |
Services Outsourcing Institutionalization Market Share Fragmented |
Data CentersSupply constraints curtailing infrastructure buildout rate, but compute capacity is being used immediately upon coming online. This differs from dot-com bubble when dark fiber was installed ahead of need. Labor, power and land shortages creating bottlenecks. |
Supply Constraints Utilization Bottlenecks Infrastructure | |
HomebuildersDespite near-term housing market challenges from affordability issues and buyer/seller strikes, there is structural underinvestment in housing relative to demographic needs. US builds same number of homes today as 1960 despite 160 million more people. Fund sees long-term bullish opportunity in companies like Toll Brothers and Champion Homes as housing market rebounds. |
Affordability Demographics Structural Shortage Millennials Manufactured | |
IndustrialIndustrial real estate benefits from multi-year demand drivers including e-commerce growth, last mile infrastructure needs, onshoring trends, and shift from just-in-time to just-in-case inventory management. AI's physical manifestation through robotics and automation will require more industrial facilities. Fund owns Prologis, EastGroup Properties, and Terreno Realty. |
E-commerce Last Mile Onshoring Inventory Robotics | |
TravelRoyal Caribbean exemplifies the portfolio's focus on companies combining physical assets with technology innovation, using AI and technology for pricing optimization, packaging, promotions, and onboard customer experience delivery. |
Technology Pricing Experience Innovation Optimization | |
| 2025 Q3 |
HousingStructural shortage of housing in the USA with higher mortgage rates reducing existing home supply as homeowners are locked into low-rate mortgages. New homebuilders capturing increasing share of home sales as they can buy-down mortgages to lower rates. |
Homebuilders Building Materials Mortgage Construction |
Real Estate |
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REITs |
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| 2025 Q2 |
RealEstate |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 23, 2026 | Fund Letters | Jeffrey Kolitch | H | Hyatt Hotels Corporation | Consumer Discretionary | Hotels & Resorts | Bull | New York Stock Exchange | asset-light, capital returns, Hotels, Travel, Unit growth | Login |
| Jan 23, 2026 | Fund Letters | Jeffrey Kolitch | CSGP | CoStar Group Inc. | Real Estate | Real Estate Services | Bear | NASDAQ | Capital Spending, Competition, Data, proptech, valuation | Login |
| Jan 23, 2026 | Fund Letters | Jeffrey Kolitch | SKY | Champion Homes Inc. | Consumer Discretionary | Homebuilding | Bull | New York Stock Exchange | affordability, Capacity, Housing policy, Manufactured housing, valuation | Login |
| Jan 23, 2026 | Fund Letters | Jeffrey Kolitch | FBIN | Fortune Brands Innovations Inc. | Industrials | Building Products | Bull | New York Stock Exchange | brands, Building Products, housing cycle, Margins, Pricing power | Login |
| Jan 23, 2026 | Fund Letters | Jeffrey Kolitch | WELL | Welltower Inc. | Real Estate | Health Care REITs | Bull | New York Stock Exchange | Demographics, NOI, Occupancy, senior housing, Supplyconstraints | Login |
| Jan 23, 2026 | Fund Letters | Jeffrey Kolitch | VTR | Ventas Inc. | Real Estate | Health Care REITs | Bull | New York Stock Exchange | Demographics, Occupancy, operating leverage, Rent growth, senior housing | Login |
| Jan 23, 2026 | Fund Letters | Jeffrey Kolitch | IRM | Iron Mountain Incorporated | Real Estate | Specialized REITs | Bull | New York Stock Exchange | cashflow, data centers, infrastructure, Mix shift, REITs | Login |
| Oct 21, 2025 | Fund Letters | Jeffrey Kolitch | WYNN | Wynn Resorts Limited | Consumer Discretionary | Casinos & Gaming | Bull | NASDAQ | Casinos, growth, Macau, resorts, Tourism, uae, valuation | Login |
| Oct 21, 2025 | Fund Letters | Jeffrey Kolitch | AAON | AAON Inc. | Industrials | Building Products | Bull | NASDAQ | data centers, efficiency, growth, HVAC, Industrials, innovation, Margins | Login |
| Oct 21, 2025 | Fund Letters | Jeffrey Kolitch | FND | Floor & Decor Holdings Inc. | Consumer Discretionary | Home Improvement Retail | Bull | NYSE | earnings, expansion, Housing, Margins, Remodeling, retail, valuation | Login |
| Oct 21, 2025 | Fund Letters | Jeffrey Kolitch | WYNN | Wynn Resorts Limited | Consumer Discretionary | Casinos & Gaming | Bull | NASDAQ | Casinos, growth, Macau, resorts, Tourism, uae, valuation | Login |
| Oct 21, 2025 | Fund Letters | Jeffrey Kolitch | AAON | AAON Inc. | Industrials | Building Products | Bull | NASDAQ | data centers, efficiency, growth, HVAC, Industrials, innovation, Margins | Login |
| Oct 21, 2025 | Fund Letters | Jeffrey Kolitch | FND | Floor & Decor Holdings Inc. | Consumer Discretionary | Home Improvement Retail | Bull | NYSE | earnings, expansion, Housing, Margins, Remodeling, retail, valuation | Login |
| Jan 23, 2026 | Fund Letters | Jeffrey Kolitch | JLL | Jones Lang LaSalle Incorporated | Real Estate | Real Estate Services | Bull | New York Stock Exchange | commercial real estate, Earnings-recovery, Outsourcing, services, valuation | Login |
| Jan 23, 2026 | Fund Letters | Jeffrey Kolitch | PLD | Prologis Inc. | Real Estate | Industrial REITs | Bull | New York Stock Exchange | data centers, Industrial REITs, Logistics, Rent growth, secular growth | Login |
| TICKER | COMMENTARY |
|---|---|
| AMH | Invitation Homes, the largest owner and manager of single-family rental homes in the US, operates a high-quality portfolio across the Western US, Sunbelt and Florida. The company has faced near-term pressure from slower job growth and reduced immigration, but its portfolio has benefited from limited new supply, renter demographics favoring single-family homes and a favorable rent-versus-buy dynamic. Long term, we believe Invitation will benefit from higher rents and strategic acquisitions to further build its portfolio. |
| AMT | 3Q beat and raise was overshadowed by DISH (not held) claiming it should be excused from future lease payments and pressure to organic billing growth. REITs also faced pressure as long-term interest rates remained stubbornly high. |
| BX | Blackstone declined. The world's leading alternative asset managers, such as Blackstone, also declined in 2025. We also right-sized our positions in Blackstone – both of which remain in Montaka's top 10. |
| CSGP | The shares of CoStar Group, Inc., the global leader in digitizing real estate, declined in the fourth quarter, due to concerns that the company's residential Homes.com platform will continue to require significant capital investment and competitive worries that Google's new real estate advertisement format and Zillow's OpenAI partnership could divert traffic from Homes.com in the years ahead. |
| DHI | Conversely, our biggest detractors this quarter were DR Horton (DHI), Lennar Corp (LEN), Home Depot (HD). |
| GMG.AX | In FY25, we added Goodman Group to the portfolio. We believe this represents a compelling investment opportunity over the medium term and was available to us at attractive valuations throughout the year. |
| H | The shares of Hyatt Hotels Corporation, a global hospitality company that focuses on serving high-end travelers, performed well in the most recent quarter due to solid quarterly results and the market's realization that its valuation multiple was too low relative to its growth rate and peers. We remain optimistic about the prospects for Hyatt because the company offers industry-leading 6% to 7% net unit growth at a two to four multiple point valuation discount relative to industry peers. |
| HLT | New position in global hospitality company Hilton. |
| IRM | Shares of Iron Mountain Incorporated, a company that offers records storage management along with an evolving fast-growing data center segment, detracted from performance during the quarter after the company posted a disappointing quarter of new bookings within its higher growth data center business. While we disagree with the short report and believe the company has compelling long-term growth prospects, we harvested losses, exited our position, and reallocated capital to higher conviction ideas. |
| JLL | Leading commercial real estate service company Jones Lang LaSalle Incorporated contributed positively to performance during the fourth quarter, aided by the company's beat and raise third quarter financial report, coupled with broad-based strength across the business. We expect the company to continue benefiting from structural and secular tailwinds: the outsourcing of commercial real estate, the institutionalization of commercial real estate, and opportunities to increase market share in a highly fragmented market. |
| PLD | Best-in-class industrial REIT Prologis, Inc. contributed positively to performance during the fourth quarter, aided by the company's strong third quarter financial report, coupled with management's robust multi-year business outlook. We continue to believe the appreciation potential for Prologis' shares remains compelling given the strong runway for future cash flow and earnings growth in the next several years and an undemanding valuation. |
| RKT | Rocket Companies, a fully integrated mortgage provider which we received shares of following the recent closing of its acquisition of Mr. Cooper, underperformed due to evolving market expectations surrounding the path of interest rates, which is key driver of its mortgage originations business. Rocket Companies, following its 2025 acquisition of Mr. Cooper, became a combined company with a market capitalization exceeding $50 billion. As a result, the position moved well beyond our small-cap mandate, and we exited the position. |
| SKY | We began acquiring shares of Champion Homes, Inc. during the quarter. Champion Homes is one of America's largest manufacturers of factory-built housing, having sold over 26,000 homes during its most recent fiscal year. Factory-built homes are potentially a key solution to housing affordability issues. The average home built by Champion Homes costs $93,000 compared to approximately $400,000 for the average site-built home in America. |
| TREX | TREX Company, a leader in composite decking, was our biggest laggard in Industrials during the fourth quarter, as an increasingly competitive environment and weaker end-market trends led to poor Q3 results. TREX saw business fall off after Labor Day, which is inconsistent with results from other peers and surveys. It was quite surprising and may be a function of its higher DIY business. Regardless, this contradicts our thesis, so we exited the position. |
| VTR | We added to our senior housing investment theme by purchasing shares of Ventas, Inc. Ventas is an operator of senior housing, life science, and medical office buildings. We have been encouraged by the company's continued robust fundamental results, growing investment momentum in its external growth pipeline and increasing openness to shedding slower growth assets to redeploy proceeds into higher growth areas. |
| WELL | During the height of COVID, Welltower and other healthcare real estate stocks were battered. In the span of two years Welltower's earnings dropped by a third as occupancy in its properties plummeted. Its valuation fell in sympathy and to our eye went too far. Welltower was a small position in the fund as the pandemic hit its peak, and we began adding to our position. When the pandemic receded Welltower began to show tremendous growth as it rebuilt occupancy, albeit off a very low base. Nevertheless, investors were cheered and the company began to experience multiple expansion. As its cost of equity dropped, the capital markets opened and Welltower began raising capital to purchase senior housing assets that, for all practical purposes, no one else wanted to own. That fueled even better earnings growth above and beyond what it was getting from occupancy growth. A virtuous cycle began where Welltower parlayed positive spread investing to become one of the biggest public real estate companies in existence. It is now the single largest company in our benchmark at almost 9% of its total market capitalization. This compares to 2022 when it was the fifth largest in the benchmark and only 4% of its total market capitalization. But like all good things, there are limits. Welltower has long been and still is the most expensive stock in our universe by a considerable margin, and that's after accounting for robust growth expectations. Unfortunately for us, we had completely exited the stock by January 2025. |
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