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, Robert Stenger, Mihail Tonchev

Performance per 2021-09-30 (rebased)

No chart data available

Performance per 2021-09-30

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  Fund Benchmark
1 month -8.8 % -8.5 %
3 months 0.9 % 0.0 %
This year 12.5 % 9.1 %
2018 -8.7 % -8.5 %
2019 32.8 % 28.5 %
2020 -8.0 % -10.7 %
1 year (on annual basis) 24.6 % 22.2 %
3 years (on annual basis) i 7.6 % 4.5 %
5 years (on annual basis) i 6.4 % 4.5 %
Since inception (on annual basis) i 6.1 % 7.6 %
Until 2014 the benchmark was the GPR 250 Europe Index, in which the UK component was reduced to 20%. From 2014 to September 30 2021, the benchmark was the FTSE EPRA Nareit Developed Europe Index. 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 165.86 M 2021-09-30
Share class size
EUR 165.86 M 2021-09-30
Number of shares
8,672,326 2021-09-30
Net Asset Value i
EUR 20.32 2021-10-26
Transaction price i
EUR 20.29 2021-10-26
Morningstar rating â„¢

Fund characteristics per 2021-09-30

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  Fund Benchmark
Number of holdings 31 108
Dividend yield i 2.70 % 2.79 %
Weighted average market capitalization i EUR 7,329 M EUR 9,042 M
P/E ratio i 19.58
Active share i 53.70 %
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 2021-09-30

KEPF posted a negative return during September but outperformed the benchmark. In the Nordics our position in Pandox continued its volatility but benefited by remaining relatively stable at a time when other Nordic commercial real estate companies were rattled from the debt fear fallout from Chinese developer Evergrande. As a reminder, the previous month Pandox had been an underperformer and we do expect the volatility to continue but ultimately see the stock at an attractive valuation although admittedly a bit less so after a strong relative month. In the UK cluster we had a tougher month but are unable to point towards a single reason for the underperformance as several positions underperformed slightly.

September was a negative month for European real estate returning -9% in local currency. The weakness was partly driven by the shock to the capital markets caused by the announcement from Chinese developer Evergrande. We elaborate further below on our thoughts on the debt issues for Chinese developers. Heaviest hit clusters in September were the ones which have the highest leverage such as the Nordics at -12% and also European Diversified at -9%.

Over the month, Chinese real estate developer Evergrande announced issues with bond payments which total a staggering $300 billion level. The impact of any collateral damage is difficult to quantify as it is difficult to determine the knock-on effects of a possible Evergrande bankruptcy on for example Chinese real estate or financial markets or steel prices. Therefore, it is hard to quantify possible knock-on effects of a possible Evergrande bankruptcy on our portfolio. We believe the quality and diversification of our holdings to provide solid risk management and do not expect to be effected disproportionally compared to the broader equity market.

During September the German national elections took place. Leading up to the elections the predictions turned more into favor of the SPD which in combination with The Greens and Die Linke could potentially form a very leftist government, which is not supportive for business. The SPD won the elections but a far left government will not happen as they did not win enough votes, which is positive. Over the month we also saw Vonovia waiving most take-over conditions for taking over Deutsche Wohnen showing it was not willing to let this deal slip. Furthermore, ADLER Group SA was the worst performing company (-35%) in the European universe as investors were increasingly worried with the corporate governance and the financials at the company. Outstanding receivables of up to €1 billion euro that take longer and longer to settle and the involvement of influential shareholders with a dubious background caused the stock to slide. During October more information and clarity is expected, to be continued.

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

ESG is of high importance to our investment process. The month of September was moderately quiet for the team on the engagement front as we continue to prepare several environmental engagements shortly after the releasing of sustainability reports of several companies later on in the year.

During September we made several changes to the portfolio. In the European Diversified cluster we see positive long term trends within logistics, like increased e-commerce penetration and reshoring, causing demand to outpace supply significantly. Share prices have started to reflect this as well. On the back of strong performance we have trimmed our position in Warehouses De Pauw (WDP). The proceeds from selling WDP were invested in Aedifica and Alstria amongst others. Aedifica is a company focused on healthcare Real Estate in Europe and is also benefiting from a favorable demand/supply imbalance caused by demographic changes (an ageing society). The fact that the company is trading at a significant premium to its book value enables it to raise equity and grow the portfolio at an above average pace. In the UK we also took some profit in outperforming logistics company Tritax Big Box and invested some of the proceeds in office landlord Great Portland Estates (GPOR). The submarkets in which GPOR operates in London show robust occupier demand with lettings ahead of estimated rental values (ERVs) and we expect the healthy demand to persist.

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 2021-09-30 (rebased)

No chart data available

Performance per 2021-09-30

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  Fund Benchmark
1 month -8.8 % -8.5 %
3 months 0.9 % 0.0 %
This year 12.5 % 9.1 %
2018 -8.7 % -8.5 %
2019 32.8 % 28.5 %
2020 -8.0 % -10.7 %
1 year (on annual basis) 24.6 % 22.2 %
3 years (on annual basis) i 7.6 % 4.5 %
5 years (on annual basis) i 6.4 % 4.5 %
Since inception (on annual basis) i 6.1 % 7.6 %
Until 2014 the benchmark was the GPR 250 Europe Index, in which the UK component was reduced to 20%. From 2014 to September 30 2021, the benchmark was the FTSE EPRA Nareit Developed Europe Index. 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 0.60
Ex-date last dividend
2021-02-26
Number of distributions per year
1
Dividend calendar

Risk analysis (ex post) per 2021-09-30

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  3 years Since inception
Maximum drawdown i -23.53 % -74.77 %
Tracking error i 3.10 % 4.48 %
Information ratio i 1.01 -0.33
Beta i 0.93 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 1 contribution (2021-09-30)

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  Contribution i Performance i
Deutsche Wohnen 0.03 % 0.67 %

Bottom 5 contribution (2021-09-30)

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  Contribution i Performance i
Vonovia SE -0.83 % -9.17 %
Fabege AB -0.76 % -13.61 %
Merlin Properties Socimi -0.62 % -10.35 %
Warehouses De Pauw SCA -0.54 % -10.13 %
Unite Group -0.51 % -10.76 %

Geographic allocation (2021-09-30)

28.4 %
United Kingdom
24.0 %
Germany
19.0 %
Nordics
8.0 %
Spain
7.9 %
Belgium
5.9 %
Switzerland
2.7 %
Ireland
2.6 %
The Netherlands
1.5 %
Other
0.4 %
The Netherlands
Total
100 %
On basis of country of exchange of the investments. The cash position is included in ‘Other’.

Top 10 holdings (2021-09-30)

9.3 %
Vonovia SE
6.0 %
Merlin Properties Socimi
5.1 %
Fabege
5.0 %
Warehouses De Pauw
4.7 %
Derwent London
4.7 %
Alstria Office REIT
4.6 %
Unite Group
4.6 %
Deutsche Wohnen
4.5 %
Entra ASA
4.3 %
LEG Immobilien
Total
52.7 %

Sector allocation (2021-09-30)

34.6 %
Offices
29.5 %
Residential
20.3 %
Industrials
9.9 %
Other
5.7 %
Retail
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
0.630 %
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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Upward swing factor i
0.35 %
Downward swing factor i
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 UCITS Daily Capped Index in euro (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 en
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.