The top five holdings for this real estate fund are: Weyerhaeuser Company (WY, 4.96% of assets); Macerich Company (MAC, 4.94%); First Industrial Realty Trust, (FR, 4.80%); Forest City Realty Trust Inc. (FCE.A, 4.76%) and Westfield Corp (WEFIF.AX, 4.64%).
Third Avenue Real Estate Value Investor Fund (TVRVX)
From Sound Advice
Third Avenue Real Estate Value Investor Fund (TVRVX) is loaded with good values substantially below NAV with strong growth prospects. Management has a similar approach to ours because it is very price conscious, especially in relation to net asset value, when making decisions on whether to buy, hold, or sell a particular company.
The managers expend great effort analyzing financial statements, visiting companies and their properties, and assessing management teams in order to come up with their estimates of intrinsic value. And, they eat their own cooking; they invest a substantial amount of their personal assets into their funds.
TVRVX has a number of distinguishing characteristics. This is a global real estate fund. Management looks for growth more than current income by focusing on real estate operating companies which, unlike REITs, can reinvest profits back into the business. Management also searches for opportunities in different aspects of a real estate company’s capital structure by investing in senior debt in addition to equity. Also unlike the typical REIT, management will go to cash when asset prices are generally high. Cash is preserved for scooping up opportunities in distressed times.
Specifically, the management team looks for four fundamental characteristics before making investments:
1) The issuer has an especially strong financial position.
2) The common stock is selling at a price that reflects at least a 20% discount from Net Asset Value (“NAV”).
3) There is comprehensive disclosure including reliable audited financial statements.
4) The prospects are that over the next three to seven years, NAV will be increasing by at least 10% annually (including dividends).
Gray Cardiff, Sound Advice, www.soundadvice-newsletter.com, 800-825- 7007, June 2016