Inside the portfolio: A Spanish standout and a value gap the market can't ignore

A key sell-down was Peakstone Realty Trust (NYSE: PKST), which we exited following Brookfield's take-private offer. By December 2025, Peakstone had divested all legacy office assets, fully repositioning as a pure-play U.S. industrial REIT focused on Industrial Outdoor Storage (IOS) - a fragmented, supply-constrained asset class with high barriers to replication and an attractive cash-flow profile. Even with its repositioning, the market has persistently undervalued the stock, pricing in residual office stigma rather than the quality of the underlying portfolio.

Private equity ultimately took notice, and Brookfield's all-cash offer of $21.00 per share represented a 34% premium to the last closing price, a 46% premium to the 30-day VWAP, and a 51% premium to our initial underwriting price.

For us, this is an example of the value we think is currently available in select global REITs, and we’re anticipating there could be similar transactions as private capital continues to narrow the gap on public market pricing.

What’s your most notable overweight and why?

This would be Chartwell Retirement Residences (CSH-U CN) - Canada’s largest retirement living operator and REIT, with a geographically diversified portfolio across Ontario, Quebec, Alberta and British Columbia. 

We built our position through the post-pandemic period when occupancy had collapsed, operating costs surged, and sentiment was deeply negative - presenting an opportunity for entry at a severe discount to pre-pandemic earnings multiples. The subsequent recovery in occupancy, combined with meaningful rental rate increases (reflecting both inflation passthrough and structural supply scarcity), has delivered strong earnings expansion that the market has begun to recognise.

New supply remains structurally constrained, with long development lead times, construction costs, and zoning restrictions limiting any competitive response and supporting Chartwell’s ability to sustain pricing power over time. 

Meanwhile, Canada's 75+ population is entering an extended period of accelerated growth, which is a trend we’re calling the ‘demographic dividend’. Chartwell still trades at a discount to replacement cost and U.S. peers, which could suggest further rerating potential.

What’s your most notable underweight and why?

Right now, it’s Prologis (NYSE: PLD), the world's preeminent logistics REIT, which is largely unmatched in scale, customer relationships, development capability, and has a credible data centre conversion pipeline. We own Prologis, but at a material underweight, as that quality comes at a premium multiple to NAV that compresses prospective returns.

We prefer to construct our logistics exposure through select platforms with a tighter regional focus: First Industrial Realty Trust (NASDAQ: FR) for pure-play U.S. infill industrial with above-average lease mark-to-market potential, based on current market conditions; LXP Industrial Trust (NYSE: LXP), a transitioning portfolio increasingly concentrated in bulk logistics and manufacturing with improving earnings quality; and Montea (EBR: MONT), with prime last-mile positioning across the ARA corridor and broader continental Europe and trading well below our assessment of intrinsic value.

This reflects our approach to active portfolio construction, capturing meaningful logistics exposure at multiples we find more attractive, while retaining Prologis as a quality anchor within the broader industrial allocation.

What’s been one of your most notable performers over the quarter?

A standout performer has been Merlin Properties (BME: MRL), which is Spain's largest REIT with a diversified Iberian portfolio including an accelerating data centre platform. It offers a strong combination of income resilience and structural growth within a single listed vehicle.

The data centre thesis has proven highly tangible. Active development and hyperscale leasing are generating gross yields on cost of approximately 14% and net yields of approximately 10%, against revaluation cap rates of potentially half that - creating an exceptional development spread and meaningful NAV creation with each delivery. 

Spain's connectivity on Tier 1 transatlantic subsea cable routes and competitively priced renewable energy make the Iberian Peninsula a structurally advantaged jurisdiction that Merlin's management was early to recognise.

The market is also now taking notice as the stock is up approximately 20% year-to-date, and the €750m capital raise to fund the third phase of its data centre pipeline only adds to our conviction.

What themes and trends are dominating discussions right now?

As you’d expect, elevated geopolitical uncertainty and macro volatility are dominating discussions. But rather than positioning defensively, we're focused on sectors with drivers not tethered to the traditional economic cycle - seniors living (demographic tailwinds), data centres (AI and technological advancement), logistics (e-commerce, onshoring, nearshoring) and essential services retail (non-discretionary, locality-based consumption).

Against this backdrop, global REITs offer a distinctive combination of hard asset defensibility and inflation-linked income, what we call the HALO trade (Hard Assets with Low Obsolescence), and we think that's increasingly relevant right now. 

Global REITs have also underperformed equities dramatically since the pandemic and are trading at historically wide discounts on both a Price/Book and Price/Cash Flow basis. It’s a gap we don't think the market can ignore indefinitely.

Managed Fund

Dexus Global REIT Fund

Global Property

View