Third Avenue International Real Estate Value Fund Q3 2025 Letter

Fund Performance - The Third Avenue International Real Estate Value Fund generated a return of +3.96% for the quarter ended September 30, 2025, compared to the FTSE EPRA/NAREIT Global ex US Index, which returned +4.03% [3] - Annualized returns for the Fund over various periods are as follows: 1 Year: 11.67%, 3 Year: 13.13%, 5 Year: 9.22%, 10 Year: 7.63%, Inception: 6.19% [4] Investment Strategy - The Fund adopts a cautious investment approach in listed real estate companies with significant emerging market exposure, focusing on experienced management teams, well-capitalized balance sheets, and smart capital allocation decisions [5] - CTP NV, a holding in the Fund, has approximately 35% exposure in Eastern Europe and manages high-quality industrial real estate across 13.5 million square meters [6] Market Trends - CTP's management highlighted strong growth rates driven by the 'nearshoring' trend, with a +16% return on equity and raised growth targets indicating potential mid-teens earnings per share growth over the next five years [7] - The demand for leasing from Asian-based manufacturers has increased to 20%, up from 10%, driven by the 'China plus one' strategy to diversify supply chains [8][9] Regional Insights - Southeast Asian countries like Malaysia, Thailand, and Vietnam are benefiting from the diversification strategy, with Thailand experiencing a 132% growth in foreign direct investment in the first half of the year [10][12] - Amata Corporation, a new investment by the Fund, specializes in developing industrial estates in Thailand and Vietnam, with a strong annual earnings growth of 20% over the past three years [13][14] Valuation and Growth Potential - The Fund acquired Amata shares at attractive valuations, around half of a conservative net-asset value estimate and a 6 times price-to-earnings ratio compared to a ten-year average of 12 times [14] - Big Yellow Group PLC, another Fund holding, has a share price offering 45% upside to the assessed net asset value, with potential interest from Blackstone for acquisition [29][32] Sector Exposure - The Fund's industrial real estate exposure accounts for 20%, with a focus on companies benefiting from 'nearshoring' and 'China plus one' trends, particularly in Central and Eastern Europe, Mexico, and Southeast Asia [17] - The Asia Pacific region now constitutes half of the Fund's assets, with the UK and Europe making up about one-third [20]