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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Third Avenue Real Estate Value Fund holds strategic real estate platforms at a 20% discount to NAV, double the historical average. The Fund added to Brookdale Senior Living, Lennar, and Savills where value gaps widened, while Segro received a takeover bid from Prologis that was rejected as inadequate."
The Third Avenue Real Estate Value Fund returned 5.99% in Q2 2026, underperforming its benchmark which returned 8.21%. The Fund maintains concentrated exposure to strategic real estate platforms trading at a more than 20% discount to conservative NAV estimates, nearly twice the long-term average. Portfolio activity focused on adding to positions where the price-to-value gap broadened, including Brookdale Senior Living (senior housing repositioning opportunity), Lennar Corp. (land-light homebuilder with path to margin normalization), and Savills plc (real estate services firm combining with Eastdil Secured at 40-50% discount to comps). A significant development involved Segro receiving a takeover proposal from Prologis at a 20% premium, which was rejected as inadequate; managers expect an improved offer. The Fund is positioned with 40.7% in U.S. residential, 29.6% in North American commercial, and 25.1% in international real estate. Key catalysts include the 21st Century ROAD to Housing Act, potential GSE conservatorship exit, and the Savills-Eastdil combination. Managers note U.S. REITs trade at elevated valuations (23x free cash flow vs. 10x in 2000), reinforcing the value of active management and the Fund's differentiated positioning outside expensive benchmark constituents.
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