November 12, 2025 10:00 PM GMT As multipolar world dynamics continue to drive the reshoring of supply chains, the implications for global logistics are profound. Our regression analysis points to a lower structural growth algorithm for ocean container throughput, with truck freight the outright beneficiary. Key Takeaways Exhibit 1: We introduce a 3-part series where we plan to unpack some of the strategic debates in Logistics as it relates to reshoring and the multipolar world. The first focuses on Modal Sh ...

Core Insights - The global infrastructure sector is positioned favorably due to various macroeconomic factors, making it an attractive area for investment [1][3] - Infrastructure investing historically provides income and downside protection, which are key considerations for investors [3] - The BNY Mellon Global Infrastructure Income ETF (BKGI) offers a broader approach to infrastructure investing, looking beyond traditional sectors [4] Infrastructure Investment Rationale - Current favorable tailwinds for infrastructure include artificial intelligence, globalization, reshoring, and demographic changes [3] - Infrastructure is expected to play a significant role in addressing the upcoming demographic shifts [3] BKGI Fund Strategy - BKGI differentiates itself by defining infrastructure more broadly than traditional funds, which typically focus on utilities, industrials, and energy [4] - The fund targets companies with fixed assets that generate cash flow and have regulatory predictability, allowing it to capitalize on various secular themes [4] Portfolio Integration - BKGI is designed to deliver income and downside protection, making it suitable for investors seeking stability [5] - Infrastructure companies generally exhibit less sensitivity to economic fluctuations, potentially outperforming other sectors during economic downturns [6] - These companies can pass costs onto consumers more effectively, maintaining essential services regardless of economic conditions [6]

Core Insights - The US Air Freight Transport Market is projected to grow from USD 49.85 billion in 2025 to USD 61.63 billion by 2030, reflecting a CAGR of 4.33% driven by demand in e-commerce, healthcare, and high-value manufacturing sectors [1][11] Market Drivers - Rapid growth in e-commerce is leading to increased demand for faster delivery, with consumers expecting two-day or same-day shipping, prompting carriers to optimize routes and expand capacity [3][12] - Nearshoring of semiconductor, electronics, and automotive manufacturing to Mexico is increasing air cargo volumes along the US-Mexico corridor, emphasizing the need for just-in-time delivery [4][12] - The healthcare sector is increasingly relying on air freight for temperature-sensitive shipments, necessitating compliance with cold-chain standards and expanding logistics capabilities [5][6] Infrastructure and Operational Enhancements - Major US airports are investing in cargo facilities and infrastructure upgrades to handle rising freight volumes, improving operational efficiency and reducing turnaround times [7][12] - Airlines are increasing their fleet of dedicated freighters and adopting sustainable aviation fuels to enhance service reliability and reduce environmental impact [7][12] Competitive Landscape - Key players in the market include UPS, FedEx, DHL, Atlas Air Worldwide Holdings, and Kuehne + Nagel, each offering specialized services tailored to various industries [10][12]

Core View - Key Tronic Corporation's shares have declined significantly, losing 12.2% since the first quarter of fiscal 2026 results, compared to a 1.3% decline in the S&P 500 index during the same period [1] - The company reported a substantial revenue drop of 24.9% year-over-year, leading to a net loss, contrasting with a profit in the previous year [2][3] Financial Performance - Revenues for the first quarter of fiscal 2026 were $98.8 million, down from $131.6 million a year ago [2] - The net loss was $2.3 million, or 21 cents per share, compared to a net income of $1.1 million, or 10 cents per share, in the prior-year quarter [2] - On a non-GAAP basis, the adjusted net loss was $1.1 million, or 10 cents per share, versus an adjusted profit of $2.8 million, or 26 cents per share, a year earlier [3] - Gross margin decreased to 8.4% from 10.1% a year earlier but improved from 6.2% in the prior quarter [4] - Operating margin turned negative at (0.6%), down from 3.4% last year [5] - Cash flow from operations was $7.6 million, down from $9.9 million in the same period last year [6] Operational Insights - Management noted that the decline in earnings was primarily due to weaker customer demand, delays in program launches, and a significant customer's bankruptcy, which led to a $1.6 million provision [10] - The company is expanding its manufacturing presence in the U.S. and Vietnam while rightsizing operations in Mexico to address ongoing uncertainties [7] - Key Tronic secured new programs in medical technology and industrial equipment, indicating diversification across end markets [8] Future Outlook - Management expects a gradual improvement in operating efficiency and a return to profitability by the end of fiscal 2026, contingent on the ramp-up of new programs [8][12] - Revenue growth for the second quarter is projected to remain unchanged sequentially, but ongoing efficiency initiatives are expected to bolster margins [13] - The company anticipates benefiting from the global shift toward nearshoring and supply-chain diversification [13] Strategic Developments - Key Tronic opened a new manufacturing facility in Springdale, AR, aimed at enhancing its U.S. footprint and technological capabilities [14] - In Vietnam, the company doubled its manufacturing capacity and obtained certification to produce medical devices, with initial production expected later in the fiscal year [14] - These expansions are part of a strategy to strengthen tariff mitigation and capture growing demand for localized manufacturing [15]

Core Insights - CTP N.V. reported a strong financial performance for Q3-2025, with net rental income increasing by 15.4% year-over-year and a like-for-like rental growth of 4.5% [1][16] - The company achieved a gross rental income of €562 million for the first nine months of 2025, reflecting a 15.1% increase compared to the same period in 2024 [2][16] - CTP's EPRA NTA per share rose by 14.0% year-over-year to €19.98, indicating robust asset valuation growth [2][34] Financial Performance - Gross rental income for 9M-2025 reached €562 million, up 15.1% from €488.4 million in 9M-2024 [10] - Net rental income increased to €549 million, a 15.4% rise from €475.9 million in the previous year [10] - Company-specific adjusted EPRA earnings grew by 13.1% year-over-year to €305.2 million, with adjusted EPRA EPS at €0.64, a 7.2% increase [3][34] Development and Construction - CTP delivered 553,000 sqm of new developments in 9M-2025, achieving a yield on cost (YoC) of 10.3%, with all units fully leased upon completion [2][20] - As of September 30, 2025, the company had 2.0 million sqm under construction, expected to generate a potential rental income of €165 million [4][22] - The landbank stood at 25.7 million sqm, with 90% located around existing business parks, providing significant growth potential [5][25] Market Position and Strategy - CTP signed leases for 1,577,000 sqm in 9M-2025, a 6% increase from the previous year, with an average monthly rent of €5.86 per sqm [11] - The company maintains a strong occupancy rate of 93% and a rent collection rate of 99.8% [15] - CTP's market share in the Czech Republic, Romania, Hungary, and Slovakia is 28.3%, making it the largest owner and developer of industrial and logistics real estate in these markets [13] Sustainability and Future Outlook - CTP's sustainability initiatives include the expansion of photovoltaic systems, with revenues from renewable energy reaching €12.4 million, up 108% year-over-year [27][28] - The company aims to achieve €1 billion in annualized rental income by 2027, supported by ongoing development and strong tenant demand [7][45] - CTP expects to deliver between 1.3 million sqm and 1.6 million sqm in 2025, with a target of reaching 30 million sqm of GLA by 2030 [24][45]

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]

Group 1: Averitt's Expansion and Nearshoring Demand - Averitt has expanded its San Antonio operations with an 85,000-square-foot distribution and fulfillment warehouse and cross-dock terminal to meet the growing nearshoring demand [2][4] - The facility now features 80 dock doors, doubling its previous capacity, along with a drive-through fueling station and on-site maintenance building [3] - The location along the I-35 corridor, which connects Laredo to major U.S. distribution hubs, positions San Antonio as a key logistics gateway for cross-border freight [4][5] Group 2: Impact of Blockades on Trade - Farmer-led blockades in western Mexico have disrupted access to the Port of Manzanillo, a critical trade gateway [6] - Key segments of the Guadalajara–Colima highway, which is the main trucking route linking Manzanillo to inland industrial hubs, have been blocked by corn producers [6]

Global Trade & Economy - Global trade is becoming increasingly complex due to strategic decoupling, nearshoring, and tariffs [1] - Supply chains are under pressure, leading to rising inflation [1] - Market fragmentation is occurring [1] - The question of whether the world is truly deglobalizing is being raised [1] Bloomberg New Economy Forum - The Bloomberg New Economy Forum will be held live in Singapore from November 19-21 [1] - The forum will cover the aforementioned topics related to the global economy [1]

Financial Data and Key Metrics Changes - Total income for Q3 2025 reached $72.4 million, a 13.7% year-over-year increase, while total income excluding energy reached $69.9 million, a 14.5% increase [6][17] - Adjusted net operating income increased 14.7% to $66.1 million, with an adjusted NOI margin of 94.4%, reflecting higher operating leverage [17] - Adjusted EBITDA totaled $59.7 million, a 15% increase year-over-year, with a margin expansion of 34 basis points to 85.3% [17] - FFO, including current tax, increased 16.5% year-over-year to $47.4 million [17] - The company revised its full-year 2025 guidance, expecting EBITDA margin to reach 84.5% and revenue growth between 10% and 11% [16][17] Business Line Data and Key Metrics Changes - Total leasing activity for Q3 2025 reached 1.7 million sq ft, with 597,000 sq ft in new leases and 1.1 million sq ft in renewals [7] - The overall portfolio occupancy reached 89.7%, with stabilized and same-store occupancy at 94.3% and 94.8% respectively [8] - The retention rate remains high, and rents on rollovers continue to trend upward, indicating strong tenant relationships [5] Market Data and Key Metrics Changes - In Monterrey, the company completed construction of Apodaca Park, with strong interest from advanced manufacturing and logistics companies [9] - Ciudad Juárez saw a market turnaround with a 130 basis point contraction in overall vacancy and 1.3 million sq ft of net absorption [10] - Tijuana is experiencing slower recovery due to high vacancy from recent supply influx, but early signs of reactivation are noted [11] - Guadalajara maintained a healthy 2.8% vacancy rate, while Mexico City reported record absorption year-to-date, with a low vacancy of 2% [12] Company Strategy and Development Direction - The company is focused on its Route 2030 growth strategy, emphasizing land acquisitions and infrastructure readiness [9][15] - Vesta aims to be selective in tenant selection, particularly in high-demand areas like Monterrey [9] - The company is prioritizing markets with visible tenant demand and plans to direct capital towards land and infrastructure readiness [15] Management's Comments on Operating Environment and Future Outlook - Management noted encouraging signs of improvement in leasing momentum and tenant demand, indicating a normalization of the market [5] - The company is confident in its ability to capture anticipated demand in 2026, supported by improving demand indicators [8] - Management highlighted the importance of energy supply and collaboration with federal authorities to enhance reliability for industrial users [14][58] Other Important Information - The company completed a $500 million senior unsecured notes offering, enhancing liquidity and extending maturity profiles [18] - Vesta sold an 80,604 sq ft building in Ciudad Juárez for $5.5 million, aligning with its strategy to recycle assets [15][19] - The company has nearly completed its land bank to support the Route 2030 strategy [9] Q&A Session Summary Question: Long-term development pipeline acceleration - Management indicated positive demand signals across most markets, with a focus on mid to long-term growth for Route 2030, while being cautious ahead of the USMCA review [21][23] Question: Demand from existing vs. new tenants - Demand is coming from both existing tenants and new companies, particularly in sectors like electronics and aerospace [24][26] Question: Update on leasing activity in October - Management confirmed leasing activity has picked up, with successful leases in various regions [30][31] Question: Sustainability of improved EBITDA margins - Management expects EBITDA margins to remain strong, with a focus on maintaining a low-cost base [40][41] Question: Indicators for launching new developments - Decisions are based on internal data, occupancy trends, and demand from existing tenants [64][66] Question: Trends in real estate taxes and insurance costs - No major adjustments in insurance costs or real estate taxes are expected, with costs being competitive for tenants [88][90]

Financial Data and Key Metrics Changes - Total income for Q3 2025 reached $72.4 million, a 13.7% year-over-year increase, while total income excluding energy reached $69.9 million, a 14.5% increase [5][6] - Adjusted net operating income increased 14.7% to $66.1 million, with an adjusted NOI margin of 94.4%, up 16 basis points from the prior year [16] - Adjusted EBITDA totaled $59.7 million, a 15% increase year-over-year, with a margin expansion of 34 basis points to 85.3% [16] - FFO, including current tax, increased 16.5% year-over-year to $47.4 million [16] - The company revised its full-year 2025 guidance, expecting EBITDA margin to reach 84.5%, up from 83.5% [15] Business Line Data and Key Metrics Changes - Total leasing activity for Q3 2025 reached 1.7 million sq ft, with 597,000 sq ft in new leases and 1.1 million sq ft in renewals [6] - The overall portfolio occupancy reached 89.7%, while stabilized and same-store occupancy reached 94.3% and 94.8% respectively [7] - The retention rate remains high, and rents on rollovers continue to trend upward, indicating strong tenant relationships [5] Market Data and Key Metrics Changes - In Monterrey, the company completed construction of Apodaca Park, with strong interest from advanced manufacturing and logistics companies [8] - Ciudad Juárez saw a market turnaround with a 130 basis point contraction in overall vacancy and 1.3 million sq ft of net absorption during the quarter [9] - Tijuana is experiencing slower recovery due to high vacancy from recent supply influx, but early signs of reactivation are noted [10] - Guadalajara maintained a healthy 2.8% vacancy rate, while Mexico City reported record absorption year-to-date at the highest in five years, with a low vacancy of 2% [11] Company Strategy and Development Direction - The company is focused on its Route 2030 growth strategy, prioritizing markets with visible tenant demand and ensuring capital allocation is tied to quality and timing [14] - The company is cautious about new developments, with only one project under construction, but plans to resume new development starts by the end of 2025 and beginning of 2026 [14] - The company is actively engaging in land acquisitions to support future growth, having acquired 330 acres in Monterrey [8] Management's Comments on Operating Environment and Future Outlook - Management noted encouraging signs of improvement in leasing momentum and tenant demand, indicating a recovery in the industrial real estate market [4] - The company is confident in its ability to capture demand as market conditions improve, particularly in key regions [7] - Management emphasized the importance of energy supply and collaboration with government authorities to support industrial parks [13] Other Important Information - The company completed a $500 million senior unsecured notes offering, enhancing liquidity and extending maturity profiles [17] - The company sold an 80,604 sq ft building in Ciudad Juárez for $5.5 million, aligning with its strategy to recycle assets [14] Q&A Session Summary Question: Are you comfortable accelerating Route 2030 projects in the first half of 2026? - Management highlighted positive demand signals across most markets, particularly in Mexico City and Guadalajara, and will analyze market trends before resuming new operations [20][22] Question: Are the positive demand signals coming from existing tenants or new tenants? - Demand is coming from both existing and new tenants, with interest from various industries including electronics and aerospace [25] Question: Can you provide an update on leasing activity in October? - Management confirmed leasing activity has picked up, with successful leases in Ciudad Juárez and Tijuana [30] Question: How sustainable is the improvement in EBITDA margins? - Management expects EBITDA margins to remain strong, projecting them to stay in the 83%-85% range as the company continues to grow [40] Question: What indicators are used to decide on new developments? - The company relies on internal data and market trends, focusing on occupancy trends and demand from existing tenants [62] Question: What is the trend in real estate taxes and insurance costs? - Management noted that insurance costs are secured for the next couple of years, and real estate taxes have not seen major adjustments [88]