Over the course of March 2025, the NAV of the Fund increased by 6.5% (A Acc GBP), outperforming the UK Real Estate Index* which decreased by 0.3%. Since its launch, the Fund has decreased by 2.9% (A Acc GBP), outperforming the UK Real Estate Index* which has fallen by 23.5% in the same period.

The strategy of the Fund is to invest in a diversified portfolio of thematic real assets. The Fund’s 21 investments are set to benefit from four socio-economic mega trends: ageing population (21.8% portfolio weight), digitalisation (45.9% portfolio weight), generation rent (25.1% portfolio weight), and urbanisation (6.8% portfolio weight).

Within each mega trend, the Investment Manager undertakes fundamental research to identify the most attractive investment opportunities. Combining top-down analysis of socio-economic mega trends with bottom-up fundamental research has yielded good results for the Fund.

The strongest performing mega trend in March was ageing population, which increased by 15.9%**. This was followed by digitalisation which increased by 6.5%**. Generation rent and urbanisation delivered negative returns, falling by 0.3%** and 2.4%** respectively.

M&A activity continued in March, with three potential offers received for assets in the Fund’s portfolio. In the ageing population mega trend, Assura (portfolio weight 5.2%), a developer, investor in, and manager of medical centres in the UK, received a potential takeover offer from KKR and Stonepeak Partners. The offer was a 31.9% premium to the undisturbed share price and represents a 2.8% increase from KKR’s previous offer. Care REIT, (portfolio weight 6.2%), a developer and investor in UK based healthcare real estate assets, announced its Board had come to an agreement with CareTrust REIT on a cash acquisition of 108p per share. The offer represents a 32.8% premium to the undisturbed share price. Warehouse REIT (portfolio weight 6.4%), an investor in multi-let warehouses, received a final cash offer from Blackstone at a 4.1% increase from their previous offer at the end of February.

While the Investment Manager welcomes takeover interest, any offer must adequately reflect a company’s long-term value. The key consideration is not simply the premium to the last traded price, but whether the bid reflects the full potential of the underlying assets. Where it falls short, the Investment Manager engages directly with the company’s Chair to advocate for a valuation that represents it’s true worth.

Investor activism and strategic reviews were also common themes across portfolio assets in March. Urban Logistics REIT, (portfolio weight 6.1%), an investor in logistics warehouse, proposed an internalisation of its management. Life Science REIT, (portfolio weight 1.9%), an investor in properties that are leased to the life science sector, announced it is undertaking a strategic review. This may involve either selling its portfolio of assets, changing the investment strategy, beginning a managed wind down, or entering into a merger.

Strong earnings were announced across portfolio assets in March, with Empiric (portfolio weight 4.9%), an investor in and manager of student accommodation, announcing an increase in EPRA EPS of 5% year-on-year, along with an increase in like-for-like rental growth of 9.3%. Duncan Garrod, CEO of Empiric, said "The business has delivered another year of great progress against its strategic objectives, most pleasingly in respect to our growth agenda. Having successfully concluded the Company’s first equity raise since 2017, our focus remains squarely on its deployment and delivery." PRS REIT (portfolio weight 4.8%), a provider of new-build rental homes for families, announced positive FY24 results, including EPRA EPS that was up 17% year-on-year, along with an increase in like-for-like rental growth of 10.8% year-on-year.

The increase in M&A activity in the sector, coupled with strong earnings performance, highlights the positive prospects for the UK REIT sector. We are at a pivotal point for the asset class, with greater investment needed in specialist listed real estate to respond to social and economic changes and increased demographic shifts. While growth concerns continue to impact capital markets, the four socio-economic mega trends - ageing population, digitalisation, generation rent and urbanisation - are set to gain. There is reason for increased optimism across these mega trends as the Fund continues to invest in defensive, domestic and dependable assets.

*MSCI UK IMI Core Real Estate Net Total Return GBP
**Defined as the calendar month, as opposed to the valuation month