Kempen European Property Fund NV

Profile

Kempen European Property Fund N.V. (KEPF) has the objective to achieve strong relative investment results by investing in a portfolio of listed European property companies. KEPF is managed on the basis of a bottom-up stock picking approach.

KEPF's strategy is to exploit mispricing between the valuation of property companies in relation to the quality of their real estate portfolios, balance sheets, corporate governance and management capability to add value to the property portfolio. The environmental, social and governance (ESG) criteria are incorporated in the investment process.

Management team

Jorrit Arissen, Egbert Nijmeijer, Lucas Vuurmans, Anna Niegowska, Robert Stenger, Mihail Tonchev

Performance per 2020-12-31 (rebased)

No chart data available

Performance per 2020-12-31

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  Fund Benchmark
1 month 3.2 % 3.8 %
3 months 10.8 % 12.0 %
This year -8.0 % -10.7 %
2017 13.4 % 12.4 %
2018 -8.7 % -8.5 %
2019 32.8 % 28.5 %
1 year (on annual basis) -8.0 % -10.7 %
3 years (on annual basis) i 3.7 % 1.6 %
5 years (on annual basis) i 4.0 % 2.3 %
Since inception (on annual basis) i 5.8 % 7.4 %
Untill 2014 the benchmark was the GPR 250 Europe Index, in which the UK component was reduced to 20%. Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.
More information can be found on the documents page of this fund

Key figures

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Total fund size
EUR 187.65 M 2020-12-31
Share class size
EUR 187.65 M 2020-12-31
Number of shares
10,651,515 2020-12-31
Net Asset Value i
EUR 17.62 2021-01-15
Transaction price i
EUR 17.69 2021-01-15
Morningstar rating â„¢

Fund characteristics per 2020-12-31

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  Fund Benchmark
Number of holdings 31 103
Dividend yield i 2.89 % 3.73 %
Weighted average market capitalization i EUR 7,046 M EUR 9,538 M
P/E ratio i 20.12
Active share i 57.72 %
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Property Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Developments per 2020-12-31

KEPF posted a positive return during December but underperformed the benchmark. Underperformance was driven by the Euro Diversified cluster where the same dynamics as during November continued, but less strong. Shopping Center companies that rallied on the Covid-19 vaccine news continued to perform strongly as well as companies with higher leverage and development or hotel exposure. To the contrary, our overweight positions in logistics landlord WDP and self-storage landlord Shurgard did not perform as expected. Despite the solid operating fundamentals, the company share prices lagged during the post-vaccine rally. In the UK cluster our overweight position in Workspace continued its strong performance in December. The company focusses on flexible office space in London and underperformed earlier in the year. Our location and building quality analysis of the real estate portfolio pointed us to significant upside in the company share price which worked out really well.

The month of December was positive for European real estate with performance for the sector coming in at +3% in local currency. There was not too much dispersion between the various clusters as the market news flow and trading volumes expectedly declined over the last month of the year. At the same time as the vaccine was rolled out throughout Europe, unsurprisingly, many countries in Europe also went into a stricter lockdown again as infection rates moved up again. The fact that countries went into a stricter lockdown did not really hurt the stock prices as investors are focusing more on the success and pace of the vaccine rollout.

On the stock specific front it is worthwhile to mention that the battle for Norway continued with Entra ASA receiving higher bids by both Castellum and SBB I Norden (SBB). The first revised bid came from Castellum valuing the company at around 185 NOK per share (or 14% higher than its first bid) and simultaneously selling a portfolio of mostly logistics (and some offices) assets to Blackstone for a yield in the high 4% range for a total sum of 18.7bn SEK. These proceeds allowed Castellum to offer a higher cash component of 30% of the total. Castellum offered 8 of its own shares for 13 shares of Entra plus a 54.4 NOK per share cash part. Subsequently, just before the Christmas holiday SBB raised its bid by 3% to a price of 190 NOK per share with a substantially higher cash component than Castellum. We saw the value of Entra and any possible combination fully priced in at these price levels hence had found significantly better valued relative opportunities elsewhere in the Nordics from the proceeds of our position in Entra. As this saga was unfolding, Balder had been buying shares on the market to build up a 15% position in Entra. Whilst initially the company’s CEO Erik Selin commented that they would rather see Entra remain as a listed entity, the tone quickly changed to a comment that there is a price for everything. We find the timing of this purchase questionable and a little but unnerving, given the close-knit nature of Nordic real estate. We had flagged in the past that governance, interdependence and transparency had been structural issues in that region and we would continue to monitor the situation with close scrutiny.

The Kempen real estate investment strategy strikes the balance between qualitative and quantitative analysis. Through application of data-analysis technology our Real Estate Team collects over 20 million relevant data points for 200,000 real estate buildings around the globe, processing this quantitative data in our data infrastructure and turning it into valuable fundamental investment information. The continuous increase in available data helps us make better assessments of the quality, value and risk of each real estate investment. This leads to better investment decisions and results in higher investment returns at lower risk for our clients.

Next to the quantitative approach the investment strategy contains three key qualitative parameters that determine the warranted valuation: management added value, balance sheet strength and ESG. The portfolio managers score each company covered on these three parameters. Companies that excel in ESG for example will be assigned a higher score and hence the warranted valuation for an investment increases.

Portfolio construction of the Strategy is based on cluster neutrality. The European portfolio has 5 clusters defined as homogeneous groups of real estate companies with similar underlying currency exposure. Examples are United Kingdom, European Residential and Switzerland. The portfolio weight of each cluster is approximately equal to the cluster’s benchmark weight. This ensures a diversified portfolio and neutralizes currency and macro-economic exposure versus the benchmark. The fund assigns its risk budget on the real estate portfolio level only.

ESG is of high importance to our investment process. The month of December saw us conclude an engagement with Tritax Big Box REIT in the UK with an unfavorable result. We had been engaging with the board to hire external consultants and provide investors with a cost/benefit analysis on the internalization of the management contract of Tritax Management LP for the REIT. Surprisingly, during December, it was announced that Tritax Management had sold a 60% interest to another party (for an undisclosed prize). This essentially eliminates the chance of internalization over the next five years as the acquirer will surely find the stable, growing and predictable investment management fees from Tritax Big Box REIT attractive and would be likely to hold onto that investment. Unfortunately, we have seen no improvements in the corporate governance of the REIT and will look carefully at the additional potential conflicts of interest that may arise from the financial acquirer of Tritax Management LP. We may yet reopen the engagement in the future.

During December we made several changes to the portfolio. In the UK, we have been selling out of our position in the diversified company Land Securities and re-investing the proceeds in logistics player Tritax Big Box. The position in Land Securities outperformed significantly on the vaccine news and Tritax Big Box still screens relatively attractive. In the Nordics we sold out of the position in Entra ASA and invested the proceeds in logistics company Catena. Entra ASA outperformed significantly on the back of the ongoing bidding war between Castellum and SBB and hence we saw better relative value in logistics. In the European Diversified cluster we trimmed our positions retail landlord Klépierre and office landlord Colonial and invested the proceeds in French office landlord Gecina. We continue to focus on refining our models and continuously challenge our assumptions to better fine tune our valuation estimates across our universe.

Kempen Capital Management N.V. (KCM) is the management company of Kempen European Property Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Performance per 2020-12-31 (rebased)

No chart data available

Performance per 2020-12-31

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  Fund Benchmark
1 month 3.2 % 3.8 %
3 months 10.8 % 12.0 %
This year -8.0 % -10.7 %
2017 13.4 % 12.4 %
2018 -8.7 % -8.5 %
2019 32.8 % 28.5 %
1 year (on annual basis) -8.0 % -10.7 %
3 years (on annual basis) i 3.7 % 1.6 %
5 years (on annual basis) i 4.0 % 2.3 %
Since inception (on annual basis) i 5.8 % 7.4 %
Untill 2014 the benchmark was the GPR 250 Europe Index, in which the UK component was reduced to 20%. Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.

Dividends

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Distributing
Yes
Last dividend
EUR 0.68
Ex-date last dividend
2020-02-13
Number of distributions per year
1
Dividend calendar

Risk analysis (ex post) per 2020-12-31

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  3 years Since inception
Maximum drawdown i -23.53 % -74.77 %
Tracking error i 2.93 % 4.52 %
Information ratio i 0.71 -0.37
Beta i 0.91 1.02
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Property Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Top 5 contribution (2020-12-31)

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  Contribution i Performance i
Workspace 0.42 % 12.57 %
Alstria Office REIT 0.40 % 9.67 %
Vonovia SE 0.37 % 3.94 %
PSP Swiss Property 0.30 % 7.01 %
Grand City Properties 0.24 % 5.79 %

Bottom 5 contribution (2020-12-31)

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  Contribution i Performance i
Fabege AB -0.13 % -2.22 %
Icade EMGD -0.03 % -7.45 %
Gecina -0.03 % -0.64 %
Warehouses De Pauw SCA -0.02 % -0.50 %
Montea -0.02 % -4.90 %

Geographic allocation (2020-12-31)

26.3 %
Germany
25.4 %
United Kingdom
19.7 %
Nordics
9.4 %
Belgium
6.4 %
Switzerland
5.2 %
France
4.2 %
Spain
2.9 %
Ireland
0.4 %
Other
Total
100 %
On basis of country of exchange of the investments. The cash position is included in ‘Other’.

Top 10 holdings (2020-12-31)

9.3 %
Vonovia SE
6.5 %
Kojamo OYJ
6.4 %
Tag Immobilien
6.3 %
Fabege
6.2 %
Warehouses De Pauw
4.5 %
Segro
4.4 %
PSP Swiss Property
4.3 %
Alstria Office REIT
4.2 %
Merlin Properties Socimi
4.1 %
Grand City Properties
Total
56.2 %

Sector allocation (2020-12-31)

35.7 %
Residential
30.2 %
Offices
27.5 %
Industrials
5.0 %
Retail
1.6 %
Other
Total
100 %
On basis of 'look through' data. The cash position is not included.
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Property Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

 

SWING FACTORS

An overview of the current swing factors are available here.

Ongoing charges

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Management fee i
0.63 %
Service fee i
0.25 %
Expected ongoing charges i
0.88 %
Ongoing charges last financial year i
0.83 %
The Ongoing Charges Figure of the last financial year relates to 2019/2020.

The service fee is determined annually on basis of the net asset value as of the last day of the previous financial year:
< or equal to EUR 200 million: 0.25%
>EUR 200 million: 0.20%

Other costs

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Kempen Capital Management N.V. (KCM) is the management company of Kempen European Property Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Share class details

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Investor type
Institutional & Private
Distributing
Yes
Benchmark i
FTSE EPRA/NAREIT Developed Europe Index (dividends reinvested)
Investment category
Real Estate
Universum
European real estate equities
Inception date
2000-10-26
Domicile
The Netherlands
May be offered to all investors in
The Netherlands
UCITS status i
Yes
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Management company
Kempen Capital Management N.V.
Depositary and custodian
BNP Paribas Securities Services S.C.A.
Morningstar rating â„¢

Tradability

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Listed
yes, listed on the NAV Trading Facility of Euronext
Subscription/Redemption Frequency
Daily
ISIN i
NL0009296649
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Property Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Property Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Kempen's vision & mission

Kempen Capital Management is an asset manager that believes in stewardship and investment focusing on the long-term for the benefit of all stakeholders. Value creation is at the heart of the services we provide to our clients. We believe that being an engaged shareholder on environmental, social and governance (ESG) issues and retaining a long-term focus, is critical to helping our clients to preserve and create sustainable wealth that has positive real world impact and economic returns.

Kempen wide approach to responsible investment

We are committed to create sustainable alpha. The four pillars of our ESG-policy are:

  • ESG integration: Ensuring sustainability risks and opportunities are adequately considered in our investment analysis and processes.

  • Exclusion & avoidance: Not investing in companies involved in controversial activities or conduct.

  • Active ownership: Being responsible stewards of our clients’ capital and using our influence through engagement and voting to improve corporate behaviour on specific ESG issues and achieve positive change

  • Positive impact: Investing with an objective to achieve positive real world outcomes and impact, such as contributing to the UN Sustainable Development Goals.Â

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To put our mission and vision into practice we engage with our investee companies on a wide array of strategic, financial, and ESG topics. As an active owner we use our influence to improve our investee companies’ ESG performance.  This helps us address some of the most pressing and important sustainability issues facing business and the world. Our focus themes for engagement are: human rights, labour rights, climate change and governance.Â

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Through collaboration with other investors and industry think tanks we contribute to the development of principles and standards of corporate responsibility both at sector levels, as well as investee company level.

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Our full voting records are available here.

Climate change

As a long-term investor, we believe climate change represents a systemic risk facing the economy, society and environment. We want to consider the risks and opportunities this presents to our investments in the coming decades. We have therefore set a long-term commitment (2050), a mid-term ambition (2030) and short-term objectives (2025).

  • 2050 commitment: Net-zero investor. Â
  • 2030 ambition: To align with a Paris Agreement pathway (listed and non-listed investments) and Dutch Klimaatakkoord. Â
  • 2025 objectives: To align with a pathway towards achieving the Paris Agreement (listed investments) and Dutch Klimaatakkoord goals.[1]

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The Kempen climate change policy can be found here (under climate change policy).

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[1]We use carbon intensity as a metric to come to the pathway of net-zero emissions. As we care about the direction of travel and reduction of carbon emissions in the economy, it might be that the actual reducing trend may deviate from the suggested average trend line. The pathway is derived from the pathway of the EU Benchmarks.

OUR FUND APPROACH TO RESPONSIBLE INVESTMENT

At Kempen, we manage several funds and mandates invested in listed Real Estate companies including the Global Property Fund[2] and the European Property Fund.

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We aim to align with a pathway towards achieving the Paris Agreement and Dutch Klimaatakkoord goals for our portfolio, as well as the EU Climate Transition Benchmark[3].

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Kempen’s ESG policy is implemented in our fund’s investment process by the following pillars: ESG Integration and Active ownership.

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[2]Kempen (Lux) Global Property Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg.Â

[3] The EU Benchmarks consists of two climate benchmarks, Climate Transition Benchmark and Paris Aligned Benchmark, which have the aim to reach net-zero emissions by 2050 - in line with the 1.5?C scenarios from the IPCC. As we care about the direction of travel and reduction of carbon emissions in the economy, it might be that the actual reducing trend may deviate from the average pathway. We use carbon intensity (based on Revenues) as the forward looking climate metric.

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Exclusion & Avoidance

In line with the general Kempen policy, the Global Property Fund and the European Property Fund excludes all companies on the KCM Exclusion- or Avoidance list.

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Companies that ‘Fail’ or are on ‘Watchlist’ marked against the criteria of the United Nations Global Compact are excluded.

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ESG integration

We believe financial and sustainability returns are indivisible and that those companies that can find the right balance between all stakeholders will drive value. Our ESG analysis for listed real estate companies includes:

  • Implementing our ESG quality score into the company score of each Real Estate company we model;

  • Monitoring the global investment universe on Real Estate companies that exhibit negative excesses, such as environmental pollution measured by CO2 emission levels to initiate engagement. Our investment process rewards companies that integrate climate risks and opportunities into their organisation, and are able to move towards a low carbon economy;

  • Benchmarking Real Estate companies against each other and visualising these results for our investment process and our clients in order to identify leaders and laggards;

  • Entering into dialogue with companies we invest in, to improve their ESG policies and practices;

  • Translating information of Real Estate company portfolios with lower sustainability scores into higher maintenance capex assumptions in our Kempen valuation models;

  • Offering product customisation to our clients who (for example) want to invest in lower CO2 emission Real Estate portfolios only.

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In our investment framework there are three key aspects we look at in determining the warranted valuation: management value add, balance sheet and ESG. We are willing to pay up for those companies that excel in ESG. This believe is underpinned by academic literature.

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The figure 'How ESG is integrated in our investment process' shows how ESG is incorporated into the investment process. Note that we do not only invest in the ESG leaders but also in the laggards as the potential value to be unlocked by providing capital to those who need it the most is massive.

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Active ownership

As an active investor, the Real Estate funds also actively engage with companies on their strategic, financial and social responsibilities.

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Our engagements focus on those companies where we believe substantial value can be unlocked. Engagement can take place on a wide array of topics including:

  • Reducing CO2 intensity levels;

  • Reducing energy and water consumption;

  • Improving waste recycling;

  • Improving working conditions and human rights;

  • Improving governance structures;

  • Improving shareholder alignment;

  • Shifting remuneration policies from being linked to short term goals to long term targets

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Our full ESG policy can be downloaded here.Â

Risks

For more information about the mid and long term risks associated with the investments:

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Although Kempen Capital Management N.V.’s information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the “ESG Parties”), obtain information from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness of any data herein. None of the ESG Parties makes any express or implied warranties of any kind, and the ESG Parties hereby expressly disclaim all warranties of merchantability and fitness for a particular purpose, with respect to any data herein. None of the ESG Parties shall have any liability for any errors or omissions in connection with any data herein. Further, without limiting any of the foregoing, in no event shall any of the ESG Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

ESG Report
Screening MSCI ESG research
Screening MSCI ESG research
UN global impact
ESG integration
Bron EN
disclaimer
Kempen Capital Management N.V. (KCM) is the management company of Kempen European Property Fund N.V. (the “Fund”). KCM is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of KCM at the Dutch Authority for the Financial Markets (AFM).

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch) and the prospectus (available in English). These documents are available on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English. The value of your investment may fluctuate. Past performance provides no guarantee for the future.