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 2020-05-31 (rebased)

No chart data available

Performance per 2020-05-31

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  Fund Benchmark
1 month 0.2 % 1.5 %
3 months -14.5 % -17.3 %
This year -19.0 % -22.2 %
2017 13.4 % 12.4 %
2018 -8.7 % -8.5 %
2019 32.8 % 28.5 %
1 year (on annual basis) -6.6 % -10.7 %
3 years (on annual basis) i 1.2 % -1.3 %
5 years (on annual basis) i 1.9 % -0.2 %
Since inception (on annual basis) i 5.2 % 6.9 %
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 160.72 M 2020-05-31
Share class size
EUR 160.72 M 2020-05-31
Number of shares
10,365,818 2020-05-31
Net Asset Value i
EUR 16.17 2020-07-07
Transaction price i
EUR 16.14 2020-07-07
Morningstar rating â„¢

Fund characteristics per 2020-05-31

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  Fund Benchmark
Number of holdings 28 101
Dividend yield i 4.04 % 4.51 %
Weighted average market capitalization i EUR 6,719 M EUR 8,232 M
P/E ratio i 17.97 16.57
Active share i 55.64 %
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.

Market developments per 2020-05-31

KEPF posted a positive return during May but underperformed the benchmark. Underperformance stemmed from the European Offices, Nordics and the UK clusters whilst Switzerland and European Residential contributed positively. In Offices, Irish office player Hibernia had a relatively difficult month: down 8% for no clear reason. During the month the company reported solid results. It receives 54% of rents from resilient tenants in the tech industry and 18% from government related tenants thus the company is in good operating shape. With an LTV below 20% and no debt maturities until 2023 the company also has a strong balance sheet. In the Nordics, Hufvudstaden failed to impress the markets with a real lack of clarity regarding the impact from Covid-19 and thus underperformed yet again. We continue to rotate the portfolio as and when volatility uncovers opportunities, but keep the large bulk of our focus to reassess and continuously challenge our estimates of fundamental value across the investment universe.

The month of May saw positive European real estate performance. However, there was significant dispersion amongst the clusters with the best performing cluster European Residential returning 11% and the worst performing cluster being shopping centers falling 6%. Offices have joined retail as an underperforming asset class over the month with both falling 2% over the month. We believe that investors are puzzled on what the future may look like for offices and it remains one of the most heavily debated sectors out there. We share our in-depth thoughts on this sector at our Q2 Alpha REIT. We believe that there will be significant dispersion in the performance of office assets at the bottom-up level, and now more than ever it is important to correctly identify and price in the best positioned locations and buildings for the growing tenants of the future.

May marked the completion of the earnings season for European real estate companies. Once the dust was settled we saw in some cases acceleration of poor fundamentals (retail) but stabilization in others (offices) and a clear call of the bottom in the hotels segment. Continued resilience was seen in industrial and multi-family segments where the real estate is indeed seen as more stable. Management teams have continued to preserve cash via tapping primarily the debt capital markets, setting up credit lines or suspending dividends. This has been done via temporary dividend suspensions, some more outspoken outright dividend cuts, and several companies changing the frequency of dividends or changing the payment type in cash or stock. For example, in Sweden, office owner Kungsleden suspended the dividend temporarily to preserve cash in case things took turn for the worse. With this risk slowing down it is likely that the board reinstates the dividend sometime this fall.

Elsewhere in the broader markets we have seen the flattening of the Covid-19 infection curve in most European nations and a passing of top infection levels in the US. The mood in the markets has been elevated as countries have set tangible near-term targets on their re-opening of non-essential businesses to the general public under strict guidelines. The re-opening of the economies presents challenges in estimating the impact on tenant sales, EBITDA margins and thus abilities to pay rent. We do not attempt to accurately estimate macroeconomic movements, geopolitical risks, currency movements, commodity prices or interest rates. We focus on adjusting our fundamental models to better assess the bottom-up impact on real estate operational changes as and when we see can estimate them. Over the month of May, certain bankruptcy risks have been reduced and the abilities to pay rent of experiential companies has been improved at the margin hence our models adjusted accordingly. However, risks remain on the horizon with unemployment continuing to rise at an alarming pace, the potential for a second wave of the pandemic (such as what has happened in Singapore) and social unrest from the US spreading globally over human rights and potentially causing political volatility. Looking ahead, the combination of these aforementioned trends can prolong the difficult economic environment and weight in on real estate fundamentals, especially as short-term government support programs begin to expire. That said, we do see continued decisive activity by the ECB to support well-functioning financial markets such as not to make a bad situation worse in the real economy.

Portfolio developments per 2020-05-31

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.

During the month we raised an issue of auditor rotation towards Stockholm based real estate player Fabege. Furthermore, we held a discussion with Unibail-Rodamco-Westfield regarding corporate governance and ended up voting on management’s recommendation after a constructive discussion.

May witnessed continued optimism on the reopening of economies for non-essential businesses. As the first quarter earnings season progressed, daily volatility once again increased and we thus moved to take advantage when possible. In the European offices cluster we further added to Shurgard (self-storage) whilst selling Dutch office specialist NSI to finance the trade. In the European residential cluster we have trimmed part of our TAG Immobilien position into Vonovia. TAG Immobilien had been approached by LEG Immobilien for a potential merger of these two regional businesses into a nationwide platform, however talks were quickly terminated. In the Nordics, we have sold part of Hufvudstaden and invested further in Stockholm office focused Fabege and nationwide Swedish office player Kungsleden as we have reassessed a further negative impact on Hufvudstaden stemming from ground level retail exposure (as part of their prime office buildings).
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 2020-05-31 (rebased)

No chart data available

Performance per 2020-05-31

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  Fund Benchmark
1 month 0.2 % 1.5 %
3 months -14.5 % -17.3 %
This year -19.0 % -22.2 %
2017 13.4 % 12.4 %
2018 -8.7 % -8.5 %
2019 32.8 % 28.5 %
1 year (on annual basis) -6.6 % -10.7 %
3 years (on annual basis) i 1.2 % -1.3 %
5 years (on annual basis) i 1.9 % -0.2 %
Since inception (on annual basis) i 5.2 % 6.9 %
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 2020-05-31

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  3 years Since inception
Maximum drawdown i -23.53 % -74.77 %
Tracking error i 2.87 % 4.57 %
Information ratio i 0.88 -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 (2020-05-31)

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  Contribution i Performance i
Vonovia SE 1.34 % 14.92 %
Tag Immobilien 0.63 % 8.67 %
Kojamo OYJ 0.59 % 10.79 %
Leg Immobilien 0.38 % 7.06 %
Grainger 0.20 % 4.37 %

Bottom 5 contribution (2020-05-31)

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  Contribution i Performance i
Safestore -0.32 % -10.82 %
Workspace -0.28 % -9.74 %
Hibernia Reit -0.27 % -7.80 %
Klepierre -0.27 % -7.84 %
Unibail-Rodamco-Westfield -0.27 % -11.46 %

Geographic allocation (2020-05-31)

25.9 %
Germany
25.4 %
United Kingdom
18.8 %
Nordics
13.2 %
France
7.3 %
Switzerland
3.1 %
Ireland
2.8 %
The Netherlands
2.5 %
Belgium
0.9 %
Other
Total
100 %
On basis of country of exchange of the investments. The cash position is included in ‘Other’.

Top 10 holdings (2020-05-31)

9.3 %
Vonovia SE
8.3 %
Segro
7.9 %
Gecina
6.8 %
Kojamo OYJ
6.6 %
Tag Immobilien
4.4 %
Grainger
4.3 %
LEG Immobilien
4.2 %
Fabege
4.1 %
Alstria Office REIT
3.8 %
PSP Swiss Property
Total
59.5 %

Sector allocation (2020-05-31)

38.2 %
Residential
31.3 %
Offices
16.7 %
Industrials
11.4 %
Retail
2.4 %
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%
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.