
28 TR Property Investment Trust
Twelve largest equity investments
† Notes:
> The percentage of investment portfolio positions set out above include exposures through CFD for both the individual positions and the portfolio.
> The five-year total shareholder returns are the returns in the local currency of the holding.
Vonovia (Germany)
Vonovia is a German listed residential
company and the largest real estate
company in Continental Europe by market
capitalisation. At the end of 2022, the
company owned a portfolio of c.€95.8bn,
primarily split between Germany (c.88.9%
of value), Sweden (c.7.4%) and Austria
(c.3.7%). The portfolio has increased
dramatically and stands at 548,000 units,
following a string of acquisitions, mostly
of listed peers, such as Deutsche Wohnen,
Hembla, Victoria Park, and BUWOG.
Vonovia is involved in the whole value chain
of the residential sector, via its rental business
(c.80.1% of group EBITDA), third-party
development segment (c.6.7%), recurring
sales segment (c.4.9%), its value-add
segment (energy, multimedia, and other
services segment, c.4.6%) and its nursing
segment (c.3.0%). The German residential
sector remains heavily regulated, yet Vonovia
has continually been able to generate solid
rent growth (+3.3% in 2022), whilst also
complying with regulations and assuming a
social role, which permits them to benefit from
critical political goodwill and partnerships (as
observed by the 20,000-unit portfolio sale to
the State of Berlin in 2021). Even though asset
values have come under pressure, as seen
with all real estate asset classes, operationally
the business continues to perform strongly as
seen by FFO I growth of 14.6% p/s, driven by
operational improvements and healthy rent
growth. Moreover, market evidence points
to further upward revisions to rent growth
estimates as the supply demand imbalance in
Germany persists.
The five-year total shareholder return has
been -45.7%.
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31 March 2023 2022
Shareholding
value £72.5m £149.9m
% of investment
portfolio
†
6.7% 8.8%
% of equity
owned 0.6% 0.5%
Share price €17.34 €42.31
1
Segro (UK)
Segro is the largest UK REIT by market cap
and is the largest operator of logistics and
industrial property listed in the UK, with a
total portfolio of c.£18bn (split c.62.0% in
the UK, c.38.0% in Continental Europe, with
c.56.0% urban warehouses, c.26.0% big
boxes and c.18.0% land and other uses).
In the UK, the group is mainly exposed to
Greater London industrial and logistics.
Rental growth in these markets has been
extremely strong as there remains an
acute supply-demand imbalance, fuelled
by tenants’ requirements to deal with the
growth in e-commerce.
In Europe, Germany and France are the
group’s largest markets with Italy third;
these markets have a lower, but still
positive, rental growth outlook (and are
geographically less space-constrained). In
2H22 UK valuations saw a sharp correction,
while EU valuations have lagged the
aggressive repricing of the UK. Segro has
extensive development exposure that it
manages largely to pre-let and develop at
yields significantly in excess of investment
values (c.6-7% yield on cost vs. an EPRA
net initial yield of 3.7% at FY22). This has
been a successful formula to drive both
earnings and NAV growth, as well as high
shareholder returns.
The five-year total shareholder return has
been +45.7%.
31 March 2023 2022
Shareholding
value £79.2m £77.3m
% of investment
portfolio
†
7.3% 4.5%
% of equity
owned 0.9% 0.5%
Share price 768p 1346.0p
31 March 2023 2022
Shareholding
value £59.6m £61.5m
% of investment
portfolio
†
5.5% 3.6%
% of equity
owned 1.1% 1.0%
Share price €20.85 €24.18
Klepierre (France)
Klépierre is a French REIT, which owns,
operates, and manages a portfolio of
European shopping centres, spanning ten
countries. At the end of 2022, the company
owned a portfolio of c.€19.8bn, with major
exposures in France (c.38.3% of value),
Italy (c.23.8%), Iberia (c.13.0%), Germany/
Netherlands (c.9.7%), and the Nordics
(c.8.7%). The company, like all shopping
centre owners, has reaped the benefits of
a return to normality as social gatherings
are permitted and travel restrictions have
been lifted demonstrated in its strong
rebound in footfall and tenant sales. While
the ongoing shift towards e-commerce
as a retail channel has continued, it has
at a slower rate, even retreating in certain
markets, with digitally native retailers
pivoting to physical by opening stores. On
a relative basis, the company continues to
benefit from its 100% focus on Continental
Europe, without any exposure to weaker
UK and US markets. Lastly, the company
benefits from the experience of the
Chairman, David Simon, also Chairman
and CEO of Simon Property Group, which
owns a c.22.3% stake in Klépierre.
In 2022, EPS growth was +18.7% YoY,
benefiting from accelerating indexation
and occupancy improvements, with
EPRA NTA broadly flat YoY. Meanwhile,
it’s financial metrics remain conservative
with a net debt to EBITDA of 7.9x and an
EPRA LTV of c.43.7%. Its average cost of
debt is low at just c.1.2%, and is expected
to remain low, as evidenced by its high
hedging ratio of c.90.0%, and weighted
average loan maturity of 6.5 years.
The five-year total shareholder return has
been -4.5%.
3