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 2020-08-31 (rebased)

No chart data available

Performance per 2020-08-31

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  Fund Benchmark
1 month 2.2 % 2.1 %
3 months 4.4 % 4.2 %
This year -15.5 % -19.0 %
2017 13.4 % 12.4 %
2018 -8.7 % -8.5 %
2019 32.8 % 28.5 %
1 year (on annual basis) -3.7 % -7.7 %
3 years (on annual basis) i 3.6 % 0.7 %
5 years (on annual basis) i 3.0 % 0.9 %
Since inception (on annual basis) i 5.4 % 7.0 %
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 169.84 M 2020-08-31
Share class size
EUR 169.84 M 2020-08-31
Number of shares
10,494,866 2020-08-31
Net Asset Value i
EUR 15.91 2020-09-29
Transaction price i
EUR 15.97 2020-09-29
Morningstar rating â„¢

Fund characteristics per 2020-08-31

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  Fund Benchmark
Number of holdings 30 102
Dividend yield i 3.97 % 4.21 %
Weighted average market capitalization i EUR 6,857 M EUR 9,414 M
P/E ratio i 17.53
Active share i 55.85 %
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 2020-08-31

KEPF posted a positive return during August and slightly outperformed the benchmark. Outperformance was largely attributed to the European Offices cluster as well as Switzerland. In the former cluster, our avoidance of Aroundtown and our overweight position in Shurgard (self-storage) aided our performance. In Switzerland, our overweight in PSP worked well as it strongly outperformed SPS over the month. We had minor underperformance in the UK due to our overweight position in Workspace which was partially offset by outperformance from our overweight in UK residential landlord Grainger. As we mentioned last month, despite strong sentiment against the sector caused by work-from-home (WFH) worries, we see the companies that we have exposure to (Workspace, Derwent London and Great Portland) well positioned to take advantage of the future working environment. In the case of Workspace, we believe it is best positioned for the hub-and-spoke future office formats that many growing companies may switch to. In the case of Derwent and Great Portland, their locations and product type is ideal for multinational headquarters in the best locations as well as growing TAMI (technology, advertising, media, information) conglomerates with a Global/European presence. Additionally, we have revised our long-term (LT) net-operating-income (NOI) estimates for the City of London down by 25 basis points to 0.75% and slightly reduced some submarket scores in several micro-locations that we seem less attractive based on changing infrastructure.

The month of August was positive for European real estate with performance for the sector coming in at 2% in local currency for the month. Once again there was some dispersion between the various clusters as the Residential cluster was very strong at +8%, yet Shopping Centers returned -7% and the office heavy Nordics returned -4%. With dispersion being high, it is important to note how resilient the residential clusters have remained through this pandemic as governments have rallied to insure support for individuals with income difficulties during the pandemic, a clear benefit for landlords, despite some temporary rental growth pressure on several markets such as the UK. It is no surprise to see offices temporarily struggling as the market has found it challenging to price the unclear effects from the work-from-home (WFH) fallout on the office landlords. The lack of proper office repopulation and low office utilizations coupled with many large traditional employers mentioning no major return to the office until the first half of 2021 has led the market to quick dire and broad conclusions. In our view, this approach fails to separate the resilient locations and building types from the less challenged ones.

August was an earnings heavy month with most companies that hadn’t reported in July releasing their earnings for the rest of the year. Management teams that were more confident of their future reinstated their guidance (e.g. industrial, residential) whilst others chose to wait it out (largely retail, some office). Broadly speaking, rental collections have been on a positive trend as economies have nearly fully opened up. In the residential cluster we saw strength in TAG Immobilien returning 13% over the month after strong earnings and the issuing of a convertible which likely triggered additional equity demand for delta hedgers by arbitrageurs. In the Nordics, we have seen Fabege announce a share buy-back program of up to 10% of the float. We see this move as a signal by management of the current discounted valuation level of the stock, but also perhaps a move to showcase that developments will not be imminently started until more market clarity emerges. We believe that Fabege should spend this time to create value through further planning/entitlement gains and working with the local authorities on the masterplan for this attractively emerging area Flemingsberg in the south of Stockholm. As the cycle bottoms out then Fabege should be well positioned with control of some of the most attractive pieces of land, with planning permissions in place, and well financed to take advantage of the recovery in the Stockholm market. Furthermore, Kungsleden has called for an extraordinary board meeting to reinstate the dividend, a move that we expected but nonetheless were surprised that many market participants had questioned.

All eyes are on the progress of a Covid vaccine and thus market volatility has been high with quick knee-jerk reactions to high level news. At the moment, we fail to see a quick resolution of the pandemic and even with the introduction of a vaccine it still leaves many uncertainties on the horizon (will it treat all Covid strains? How quickly can it be administered? Has it been tested sufficiently? Will everyone sign up to do it?). The gradual reopening of economies, and smarter way to track infections is encouraging and we see low risk for a second broad based shutdown which would be extremely crippling. Where we stand now, with quick responses from Central Banks and governments we see the liquidity risks to be well controlled, but we have yet to experience the full rollout of the solvency issues that have been triggered by the shutdown and the new normal.

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 6 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. KEPF assigns its risk budget on the real estate portfolio level only.

ESG is of high importance to our investment process. The month of August was quiet for the team on the engagement front. We note that Vonovia has won the top spot in ESG ratings at Sustainalytics for European real estate and more impressively has gained 17th place out of the 12,500 companies rated by Sustainalytics, a good benchmark for the sector. Additionally, we are conducting further research into the various incidents that have occurred in the Nordics cluster earlier this year regarding insider dealing allegations concerning key executives at SBB I Norden and Balder, the evidence of which had been yet inconclusive.

August was a month with some volatility and we made changes to the portfolio accordingly. In the UK we sold parts of our positions in Segro and Land Securities in favor of Great Portland, Derwent London and Shaftesbury. As mentioned earlier, despite making downward adjustments to several operating fundamentals we still find these stocks heavily discounted and thus exhibiting attractive expected corrections. In the Nordics, we have been adding to our position in Fabege and trimming our position in Entra after negative Gateway city office sentiment caused for the former to have an even higher relative attractive expected correction. In the Residential cluster we have been trimming Vonovia in favor of Grand City Properties. As August concluded the information heavy second quarter earnings, 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 2020-08-31 (rebased)

No chart data available

Performance per 2020-08-31

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  Fund Benchmark
1 month 2.2 % 2.1 %
3 months 4.4 % 4.2 %
This year -15.5 % -19.0 %
2017 13.4 % 12.4 %
2018 -8.7 % -8.5 %
2019 32.8 % 28.5 %
1 year (on annual basis) -3.7 % -7.7 %
3 years (on annual basis) i 3.6 % 0.7 %
5 years (on annual basis) i 3.0 % 0.9 %
Since inception (on annual basis) i 5.4 % 7.0 %
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 2020-08-31

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  3 years Since inception
Maximum drawdown i -23.53 % -74.77 %
Tracking error i 2.88 % 4.54 %
Information ratio i 1.01 -0.36
Beta i 0.92 1.03
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 (2020-08-31)

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  Contribution i Performance i
Tag Immobilien 0.89 % 12.64 %
Vonovia SE 0.88 % 9.76 %
Gecina 0.33 % 5.02 %
Shurgard Self Storage Europe 0.28 % 10.49 %
PSP Swiss Property 0.26 % 5.82 %

Bottom 5 contribution (2020-08-31)

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  Contribution i Performance i
Fabege AB -0.31 % -5.62 %
Kojamo OYJ -0.28 % -3.79 %
Mercialys -0.24 % -15.88 %
Workspace -0.23 % -7.58 %
Klepierre -0.20 % -5.41 %

Geographic allocation (2020-08-31)

28.1 %
Germany
25.8 %
United Kingdom
18.5 %
Nordics
9.2 %
France
6.9 %
Switzerland
5.4 %
Belgium
3.3 %
Ireland
1.5 %
The Netherlands
1.0 %
Spain
0.4 %
Other
Total
100 %
On basis of country of exchange of the investments. The cash position is included in ‘Other’.

Top 10 holdings (2020-08-31)

9.4 %
Vonovia SE
7.1 %
Kojamo OYJ
6.7 %
Tag Immobilien
5.8 %
Fabege
4.5 %
Gecina
4.4 %
PSP Swiss Property
4.3 %
Grand City Properties
4.1 %
Segro
4.0 %
Alstria Office REIT
3.8 %
Great Portland Estates
Total
54.1 %

Sector allocation (2020-08-31)

38.7 %
Residential
30.4 %
Offices
16.9 %
Industrials
11.8 %
Retail
2.2 %
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
0.20 %
Expected ongoing charges i
0,83 %
Ongoing charges last financial year i
0.83 %
The Ongoing Charges Figure of the last financial year relates to 2018/2019.

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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As of 14 January 2019 the swing factor has been adjusted from 0.40%/0.20% to 0.40%/0.15%.
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.

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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[1] and the European Property Fund.

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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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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;

  • 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.

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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.