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 2019-10-31 (rebased)

No chart data available

Performance per 2019-10-31

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  Fund Benchmark
1 month 2.2 % 3.1 %
3 months 9.3 % 11.3 %
This year 23.7 % 21.6 %
2016 -3.8 % -5.3 %
2017 13.4 % 12.4 %
2018 -8.7 % -8.5 %
1 year (on annual basis) 15.4 % 14.6 %
3 years (on annual basis) i 9.9 % 9.2 %
5 years (on annual basis) i 9.5 % 8.1 %
Since inception (on annual basis) i 6.2 % 8.2 %
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 300.19 M 2019-10-31
Share class size
EUR 300.19 M 2019-10-31
Number of shares
16,220,150 2019-10-31
Net Asset Value i
EUR 19.14 2019-11-19
Transaction price i
EUR 19.22 2019-11-19
Morningstar rating â„¢

Fund characteristics per 2019-10-31

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  Fund Benchmark
Number of holdings 34 104
Dividend yield i 3.24 % 3.75 %
Weighted average market capitalization i EUR 8,289 M EUR 8,376 M
P/E ratio i 17.14 15.84
Active share i 50.57 %
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 2019-10-31

KEPF posted a positive absolute return during October and underperformed its benchmark. Relative underperformance is explained by stock selection in the cluster Nordics. Portfolio holding Fabege AB (-11.5%) posted third quarter results that were below market expectations. We haven’t changed our model assumptions materially as reported net operating income growth of 3.5% is in-line with our valuation model. We continue to see value in the shares of Fabege.

The Berlin political coalition (the Senate) reached agreement on the ‘Mietendeckel’-proposal. As a reminder, the left-wing and green coalition in Berlin want to freeze rental growth for apartments in Berlin to keep them affordable. We wrote several prior monthly reports on this topic. The final version of the Berlin apartment rental freeze actually has “rent reduction”-instruments built-in instead of being a total freeze. Age of the building, and availability of modern equipment inside the building are elements used to set rental growth amongst others. As of January 1, 2022, the maximum rent can be increased annually by the inflation that’s occurred since June 2019 with a cap of 1.3% per annum. The rent-freeze is thus watered down somewhat compared to the initial comments from the Berlin Senate.

In Sweden, third quarter reporting is underway with results that indicate a slow-down in operational results coming from a very high level. Portfolio holding Fabege reported a still healthy 3.5% like-for-like net operating income (NOI) growth figure and a 5.6% value growth. Fabege’s Stockholm office portfolio will continue to support healthy NOI growth in upcoming years is our expectation as Fabege’s office portfolio has a built-in reversionary potential of approximately 20%. Meaning, in-place rents of the Fabege portfolio are approximately 20% below current market rents. Each re-lease does drives rental growth.

Portfolio developments per 2019-10-31

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 macroeconomic exposure versus the benchmark. KEPF assigns its risk budget on the real estate portfolio level only.

During the month changes were made to the portfolio. In the cluster United Kingdom portfolio weight was reduced in Capital and Counties and reinvested into Segro. This change was valuation driven. In the cluster Nordics, portfolio weight was added to Fabege after the negative share price reaction following third quarter results. This was funded by selling down Entra in the same cluster.
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 2019-10-31 (rebased)

No chart data available

Performance per 2019-10-31

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  Fund Benchmark
1 month 2.2 % 3.1 %
3 months 9.3 % 11.3 %
This year 23.7 % 21.6 %
2016 -3.8 % -5.3 %
2017 13.4 % 12.4 %
2018 -8.7 % -8.5 %
1 year (on annual basis) 15.4 % 14.6 %
3 years (on annual basis) i 9.9 % 9.2 %
5 years (on annual basis) i 9.5 % 8.1 %
Since inception (on annual basis) i 6.2 % 8.2 %
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 0.57
Ex-date last dividend
2019-02-13
Number of distributions per year
1
Dividend calendar

Risk analysis (ex post) per 2019-10-31

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  3 years Since inception
Maximum drawdown i -12.15 % -74.77 %
Tracking error i 1.89 % 4.54 %
Information ratio i 0.36 -0.45
Beta i 1.03 1.04
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 (2019-10-31)

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  Contribution i Performance i
Gecina 0.56 % 6.66 %
Big Yellow 0.39 % 12.44 %
Derwent London 0.36 % 8.18 %
Unibail-Rodamco-Westfield 0.34 % 3.68 %
Segro 0.33 % 6.05 %

Bottom 5 contribution (2019-10-31)

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  Contribution i Performance i
Fabege AB -0.59 % -11.43 %
Hufvudstaden -0.31 % -9.62 %
Adler Real Estate -0.24 % -10.39 %
Wihlborgs Fastigheter AB -0.22 % -9.00 %
Hibernia Reit -0.14 % -5.03 %

Geographic allocation (2019-10-31)

27.7 %
United Kingdom
22.9 %
Germany
12.6 %
Nordics
12.5 %
The Netherlands
9.7 %
France
6.5 %
Switzerland
3.0 %
Belgium
2.6 %
Ireland
2.2 %
Spain
0.3 %
Other
Total
100 %
On basis of country of exchange of the investments. The cash position is included in ‘Other’.

Top 10 holdings (2019-10-31)

9.3 %
Unibail-Rodamco-Westfield
9.3 %
Vonovia SE
8.6 %
Gecina
5.9 %
Deutsche Wohnen
5.9 %
Segro
4.7 %
Fabege
3.9 %
Unite Group
3.8 %
Alstria Office REIT
3.8 %
PSP Swiss Property
3.5 %
Derwent London
Total
58.7 %

Sector allocation (2019-10-31)

29.9 %
Offices
29.3 %
Residential
18.8 %
Industrials
15.8 %
Retail
6.2 %
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.

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
0.88 %
The Ongoing Charges Figure of the last financial year relates to 2017/2018.

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%
The service fee has been decreased by 0.05% as of 1 October 2018. The expected ongoing charge factor of Fiscal Year 2018/2019 is therefore also decreased by 0.05%.

Other costs

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Upward swing factor i
0.40 %
Downward swing factor i
0.15 %
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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*

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 Research
Screening MSCI Research
UN
ESG integration
Source
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.