Third Avenue Real Estate Value Fund Q1 2026 Shareholder Letter
The Third Avenue Real Estate Value Fund returned -10.02% in Q1 2026, underperforming its benchmark which gained +0.59%, due to declines in real estate services, residential, and U.K. property holdings. The fund made new investments in Brookdale Senior Living and Hang Lung Group, citing long-term potential in senior housing and Asian retail real estate. Despite short-term underperformance, management emphasizes the fund's strong long-term annualized return of 8.46% since inception. Holdings were trading at an average 30% discount at quarter-end, a rare valuation level seen only three other times in 15 years.
- ▪The Third Avenue Real Estate Value Fund reported a Q1 2026 return of -10.02%, compared to a +0.59% return for the MSCI ACWI IMI Core Real Estate Index.
- ▪The fund invested in Brookdale Senior Living, a U.S. senior housing operator with nearly 600 communities and over 50,000 residents.
- ▪Another new holding is Hang Lung Group, a Hong Kong-based real estate company with approximately 2.9 million square feet of leased retail and office space.
- ▪Fund management believes real estate services firms benefit from AI through process efficiency, despite being less prone to full automation.
- ▪At quarter-end, the fund's holdings traded at an average 30% discount, a valuation level reached only three other times in the past 15 years.
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