| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 6.0% | -1.2% | 25.6% |
| 2025 |
|---|
| 25.6% |
The Third Avenue International Real Estate Value Fund delivered a 25.56% return in 2025, outperforming its benchmark by 4.14%. The fund's thesis of privatization activity materializing due to wide valuation discounts proved correct, with three holdings entering privatization discussions and two transactions confirmed. Mandarin Oriental returned 95% after Jardine Matheson offered a 52% premium, while National Storage received a 27% premium offer from Brookfield and GIC. The fund trades at 13x forward P/E versus 22x for the S&P 500, representing the widest relative discount in a decade, alongside a 30% discount to conservative NAV estimates. Holdings emphasize deep value opportunities in self-storage platforms, undersupplied residential markets, and companies with resource conversion potential across diverse geographies. Key risks include persistent valuation discounts if public markets fail to recognize value. Catalysts include potential dollar weakness, interest rate cuts, and continued privatization activity. Management remains constructive on 2026, expecting attractive total returns from earnings growth and NAV expansion even if multiples remain stable.
International real estate companies trade at significant discounts to intrinsic value despite strong fundamentals, creating opportunities for privatization activity at meaningful premiums and attractive total returns through earnings growth and resource conversion.
Fund Management remains constructive about 2026 with valuation as a key advantage. The setup of NAV growth, earnings expansion, and robust earnings yield can generate attractive total returns with an earnings yield of close to 8% and potential for high single-digit earnings growth. If public markets do not recognize value through increased share prices, private markets will do so through privatization at significant premiums.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 22 2026 | 2025 Q4 | 8923.T, BYG.L, CTP.AS, GLV.L, HKL.L, LLC.AX, MPNGF, NSR.AX, SVI.TO, TEG.DE, VEST.MX | Asia, discount, international, NAV, Privatization, real estate, Self Storage, value | - | Fund focuses on international real estate companies trading at significant discounts to net asset value, with holdings across self-storage, residential development, hotels, and diversified real… |
| Oct 21 2025 | 2025 Q3 | 3YZ GR, AMATA TB, BYG LN, SHUR BB | China Plus One, Industrial Real Estate, private equity, Self-Storage, Southeast Asia | - | The fund highlights the ongoing nearshoring and "China plus one" trends driving industrial real estate growth in Central and Eastern Europe and Southeast Asia, supported… |
| Jul 25 2025 | 2025 Q2 | LLC AU | asset value, Balance Sheets, cyclicality, Discounts, real estate | LLC AU | The commentary centers on global real estate securities trading at discounts to private market value. Management highlights balance-sheet strength and asset-level optionality. Cyclical pessimism is… |
| Mar 31 2025 | 2025 Q1 | 1686 HK, FPH, UTG LN, WDB BB | - | - | - |
| Dec 31 2024 | 2024 Q4 | 0LST LN, 1821 HK, GLV LN, HKLD LN, TEG GR, VTMX | - | - | - |
| Sep 30 2024 | 2024 Q3 | 1686 HK, 1821 HK, AEDAS SM, GENS SP, MRL SM, VWDRY | - | - | - |
| Jul 19 2024 | 2024 Q2 | 1821 HK | - | - | - |
| May 7 2024 | 2024 Q1 | 3231 JP, 8923 JP | - | - | - |
| Jan 28 2024 | 2023 Q4 | - | - | - | - |
| Oct 25 2023 | 2023 Q3 | BYG LN | - | - | - |
| Jul 14 2023 | 2023 Q2 | - | - | - | - |
| Mar 31 2023 | 2023 Q1 | 69 HK | - | - | - |
| Dec 31 2022 | 2022 Q4 | VI6 GR | - | - | - |
| Oct 25 2022 | 2022 Q3 | BKG LN, MDO LN, SGRO LN | - | - | - |
| Jun 30 2022 | 2022 Q2 | INA AU, VWS AV | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Real EstateExposure through liquidating real estate holdings (STHO) and entertainment real estate (SEG). Focus on asset monetization and development projects with major tenants like Meow Wolf driving traffic and rental income growth. |
Liquidation Development Asset Sales Entertainment Manhattan |
Self Storage REITsMultiple self-storage holdings entered privatization negotiations during the quarter, including National Storage receiving a 27% premium offer from Brookfield and GIC. These platforms operate 10-20 years behind the mature U.S. market with significant scalability and structural growth potential. |
Self Storage Privatization Growth Scalability Premium | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q3 |
Nearshoring |
|
Privatization |
||
Self-Storage |
||
| 2025 Q2 |
RealEstate |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 25, 2025 | Fund Letters | Quentin Velleley | LLC AU | Lendlease Group | Real Estate | Real Estate Development | Bull | New York Stock Exchange | deleveraging, development, NAV, realestate, Simplification | Login |
| TICKER | COMMENTARY |
|---|---|
| BYG.L | Blackstone's discussions with Big Yellow in the U.K. did not result in a transaction; however, we believe that any future privatization would likely require a premium of ~35% above the current share price. The founders—who collectively own more than £100 million of shares—appear open to a sale at the right valuation. |
| LLC.AX | Lendlease traded down over the quarter (ASX: LLC -5.5%), with interest rate dynamics continuing to weigh on rate-sensitive real estate stocks. Towards the end of the quarter, LLC announced progress on the $2bn of planned capital recycling during FY26 with a binding agreement exchanged for the ~$400m sell down of The Exchange TRX retail mall, a full divestment of LLC's 60% interest in the adjacent office tower in Malaysia and affirmation that the sale of their ~25% remaining stake in the Keyton retirement business is progressing with exclusive negotiations underway. Despite progress on execution across the simplification strategy, the stock has continued to drift and trades at a ~30% discount to NTA, implying limited value being attributed to the Group's core operating businesses. |
| MPNGF | The Fund's top performer in 2025 was Mandarin Oriental, which returned +95%. Early in the fourth quarter, its largest shareholder, Jardine Matheson, offered to privatize the company at a 52% premium to its current share price. For context, Fund Management's 2022 investment thesis anticipated this outcome. At the time, Mandarin was completing a US$2 billion office and retail development in Hong Kong, the value of which was expected to equal the company's entire market cap and imply no value for the substantial hotel portfolio and management platform. Alibaba's subsequent agreement to acquire half of the asset triggered a complete privatization of the remaining shares. |
| NSR.AX | National Storage (Australia) received a privatization offer from Brookfield Asset Management and the Government of Singapore Investment Corporation (GIC) at a 27% premium, consistent with our NAV estimate. The company exemplifies attributes common across many Fund holdings: irreplaceable assets in high-demand markets, inflation-resistant cash flows, a value-accretive operating platform, a straightforward capital structure, and strong alignment between management and minority shareholders. |
| SVI.TO | StorageVault is a national owner and operator of self-storage facilities. We believe both companies are led by proven value creators — Steve Scott at StorageVault and remain confident in their ability to compound intrinsic value over time. |
| TEG.DE | German and Polish residential owner and developer TAG Immobilien (TAG). Underpinned by a portfolio of over 83,000 resilient German rental units, TAG continues to expand into the higher-growth Polish residential market, where favorable market conditions exist. Despite now accounting for almost half of TAG's earnings, the Polish exposure remains significantly underappreciated at the current share price. Ongoing favorable fundamentals should act as a catalyst for TAG shares over time. |
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