Core Insights - The Third Avenue International Real Estate Value Fund achieved a return of +25.56% for the year ending December 31, 2025, outperforming the MSCI ACWI ex USA IMI Core Real Estate Index, which returned +21.42% [2][3] - The Fund's performance was driven by a 13% appreciation in share prices, a 4% dividend yield, and an 8% benefit from a weaker U.S. Dollar [3][4] - The Fund's forward price-to-earnings ratio is at 13 times, with a 30% discount to the estimated net asset value (NAV) of its holdings [3][5] Fund Performance - The Fund's annualized returns over various periods are as follows: 1 Year: +25.56%, 3 Year: +10.48%, 5 Year: +5.55%, 10 Year: +7.08% [3][40] - The MSCI ACWI ex USA IMI Core Real Estate Index showed lower annualized returns: 1 Year: +21.42%, 3 Year: +6.94%, 5 Year: -0.23%, 10 Year: +2.45% [3][40] Investment Activity - The Fund's management noted a disconnect between the earnings potential of its holdings and their low trading multiples, leading to increased privatization activity [4][5] - By year-end, two transactions were confirmed, with three holdings entering privatization discussions, indicating a trend of elevated merger and privatization activity [5][6] - Mandarin Oriental was the top performer, returning +95%, following a privatization offer at a 52% premium to its share price [6][7] Sector Focus - The Fund emphasizes investments in deep value and special situations, undersupplied residential markets, and self-storage platforms [12] - Current asset allocations include 36.3% in undersupplied residential, 24.4% in immature self-storage, and 19% in lodging/hotels [14][18] Geographic Exposure - The Fund's regional exposure includes 35.7% in the UK, 25.3% in LATAM, and 15% in Australia/New Zealand [20][21] - The Fund's investments are diversified across various markets, with a focus on high-demand areas [20] Outlook - The Fund's management remains optimistic about 2026, citing a favorable valuation environment with a price-to-earnings ratio of 13 times compared to 22 times for the S&P 500 [24][30] - Potential macro factors supporting multiple expansion include a shift in global capital flows, continued U.S. Dollar weakness, and possible interest rate cuts [30][31] - The Fund targets investments with idiosyncratic value drivers, including improving fundamentals in key markets and significant resource conversion opportunities [31][32][33]