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The Third Avenue International Real Estate Value Fund demonstrated resilience and strategic acumen, achieving a 3.96% return in the third quarter of 2025. This performance closely mirrored that of its benchmark, the FTSE EPRA/NAREITEIT Global ex US Index. The fund's approach is characterized by a judicious selection of investments in listed real estate, particularly within emerging markets, emphasizing robust management, sound financial health, and a track record of value creation. A significant recent move includes an investment in Amata Corporation, a strategic acquisition designed to bolster the fund's industrial real estate portfolio. This aligns with broader economic shifts like 'nearshoring' and the 'China plus one' strategy, which are reshaping global supply chains. Furthermore, the fund continues to explore compelling opportunities in undersupplied residential sectors and the burgeoning self-storage market, where it sees considerable potential for growth and platform value, as evidenced by the potential acquisition of Big Yellow Group PLC.

Insightful Investment Trends in Global Real Estate

In the third quarter of 2025, the Third Avenue International Real Estate Value Fund posted a commendable return of +3.96% (after fees), a figure nearly in lockstep with its benchmark, the FTSE EPRA/NAREITEIT Global ex US Index, which returned +4.03% (before fees) over the same period. This performance underscores the fund's commitment to strategic and informed investment decisions.

The fund employs a disciplined methodology for investments in real estate companies with exposure to developing economies. Key criteria include seasoned management teams aligned with minority shareholder interests, strong balance sheets with ample liquidity, and robust local banking relationships. Investments are also contingent on a history of smart capital allocation that consistently generates shareholder value and a focus on high-quality real estate poised to benefit from long-term cyclical or structural growth.

An exemplary holding is CTP NV, headquartered in the Netherlands but with substantial operations (approximately 35%) in Eastern Europe's emerging markets. CTP manages and develops an extensive portfolio of 13.5 million square meters of high-quality industrial real estate and boasts a significant development pipeline and landbank. The company's recent capital markets day highlighted sustained growth, fueled by the 'nearshoring' trend, which sees manufacturing and supply chains relocating closer to end-consumers. This has led to heightened tenant demand, high returns on equity (16%), and upwardly revised growth targets projecting mid-teens earnings per share growth over the next five years.

A notable observation from CTP's presentation was the increasing presence of Asian manufacturers in Europe, now accounting for 20% of CTP's leasing, up from 10%. This surge is attributed to a 'China plus one' strategy, driven by geopolitical tensions, rising costs in China, and supply chain vulnerabilities exposed by the COVID-19 pandemic. Consequently, Southeast Asian nations like Vietnam, Malaysia, and Thailand are emerging as significant beneficiaries due to their strategic proximity, cost advantages, and large labor pools. Vietnam, for instance, witnessed a 33% increase in registered foreign investment in the first half of the year, while Thailand experienced a remarkable 132% growth in foreign direct investment during the same period. Much of this investment in Thailand is directed towards its Eastern Economic Corridor, focusing on high-tech manufacturing, such as electric vehicles and smart electronics, supported by excellent infrastructure and business incentives.

Capitalizing on these robust structural growth drivers and adhering to its cautious investment philosophy, the fund initiated an investment in Thailand-listed Amata Corporation. Amata, a leader in developing and managing industrial estates in Thailand and Vietnam, has successfully leveraged the investment boom, achieving 20% annual earnings growth over the last three years while maintaining a strong financial position. Despite its impressive growth, Amata's shares were acquired at attractive valuations, trading at about half of a conservative net-asset value estimate and a price-to-earnings ratio of 6x, significantly below its ten-year average of 12x. This discount is largely due to uncertainties surrounding U.S. trade policy, although recent agreements and increasing China-U.S. geopolitical tensions are unlikely to derail the fundamental 'China plus one' shift benefiting Southeast Asia. Amata's focus on integrated estate development has also boosted its recurring income, now comprising roughly half of its earnings, further enhancing its risk profile. With a dividend yield of approximately 6%, Amata is expected to see positive share price appreciation as its growth strategy unfolds.

The fund's investment in Amata strengthens its exposure to industrial real estate, particularly in regions benefiting from nearshoring and 'China plus one' trends. Industrial real estate constitutes 20% of the fund's total exposure, with over half of these investments concentrated in Central and Eastern Europe, Mexico, and Southeast Asia. This geographical diversification is a hallmark of the fund's strategy, with the Asia Pacific region (including Japan and Australia) now accounting for half of its assets, and the UK, Europe, Canada, and Latin America making up the remainder.

Beyond industrial real estate, the fund maintains high-conviction positions in self-storage, which represents 20% of its exposure. The thesis for self-storage investments is compelling: low current occupancies due to recent development promise significant earnings growth from lease-ups, self-storage is generally undersupplied outside the U.S. with high barriers to entry, and long-term demand is positive due to increased consumer awareness and urbanization. A recovery in housing market activity and declining interest rates are expected to boost occupancy and earnings. Additionally, international self-storage assets trade at attractive discounts compared to private market valuations, unlike their U.S. counterparts. The operational intensity of self-storage also offers significant platform value. Shurgard Self Storage Ltd., a fund holding, demonstrated this by acquiring 'Lok N Store' and subsequently improving occupancy, reducing staff, and optimizing assets, showcasing the financial benefits of leveraging an established management platform.

This strong potential for scalability and growth has drawn attention to companies like Big Yellow Group PLC, which recently became the subject of a potential cash offer from Blackstone Europe LLP. Big Yellow, with its portfolio of 109 self-storage assets around London and 14 under development, was trading at a 45% discount to the fund management's assessed net asset value of £14.4 per share before the announcement. Independent appraisals by JLL also supported a £13.6 net asset value, suggesting additional upside from a portfolio premium if sold as a whole. While the U.K.'s macroeconomic situation creates some uncertainty, the fund management has a positive history with Blackstone's privatization efforts. Big Yellow's appeal stems from its founders' reduced day-to-day involvement, a conservative balance sheet, the scarcity value of large-scale self-storage portfolios, and significant earnings potential from lease-ups, development, and acquisitions. Given that many of the fund's 25 holdings share similar characteristics, the fund management believes that privatizations will continue as public markets may not fully recognize the inherent value in these assets, leading to a constructive outlook for the fund.

The meticulous approach of Third Avenue International Real Estate Value Fund in navigating global real estate markets offers a compelling blueprint for investors. By prioritizing sound fundamentals, experienced management, and a keen eye for structural economic shifts like 'nearshoring' and the 'China plus one' strategy, the fund not only aims for competitive returns but also seeks to mitigate risks inherent in dynamic global economies. The focus on undervalued assets in growth sectors, such as industrial real estate and self-storage, demonstrates a proactive strategy to capitalize on emerging opportunities. This blend of caution and ambition, coupled with a commitment to long-term value creation, provides valuable insights for any investor seeking to build a resilient and growth-oriented portfolio in the complex landscape of international real estate.