The Global Real Estate Securities Market
Global listed real estate securities offer investors the following attractive attributes:
- Superior absolute and risk-adjusted returns
- Low correlation to other investment alternatives
- High levels of current income
- Governance and transparency
- Diversification by property type and geography
Although the global commercial real estate market has a value of approximately $30 trillion, only about 10% is held by publicly-traded companies. These companies now represent a myriad of sectors that include conventional property types such as office, multi-family, and industrial, but have grown to include other assets such as data centers, towers, and storage facilities.
At Sugi, we employ a rigorous top-down and bottom-up investment approach using our decades of experience. Our goal is to generate attractive absolute and relative returns over a cycle while seeking to quantify and limit downside risk. We seek to invest in stocks:
- That are trading materially below NAV, with a pathway to erase that discount
- That are trading at material discounts to intrinsic value
- Where Sugi can engage with management/boards to create shareholder value
The Sugi Sustainable Yield Strategy:
The Sustainable Yield Strategy’s investment objective targets a portfolio-level dividend yield of at least 1.5 percent above the broader REIT market. The portfolio is comprised of 25 to 40 stocks that should generate stable cash flow in excess of dividends with moderate appreciation potential. The strategy targets a gross annualized total return of 8-10% over a cycle.
The Sugi Diversified Strategy:
The Diversified Strategy’s investment objective is to own a high-conviction portfolio of quality stocks that trade at material discounts to intrinsic value. The portfolio is comprised of 25 to 40 stocks and is benchmark agnostic, unlike conventional long-only managers which generate below-benchmark returns over time with low active-share. The strategy targets a gross annualized total return of 9-12% over a cycle and seeks to deliver superior returns relative to REIT benchmarks.
The Sugi Opportunity Strategy:
The Opportunity Strategy’s investment objective is to own a highly-concentrated portfolio of 10-15 stocks that trade at material discounts to intrinsic value – these discounts may be caused by a number of factors such as poor market sentiment, a misunderstood story, or technical issues. Through active engagement with management and/or company boards, our goal is to help the stocks reach intrinsic value. The strategy targets a gross annualized total return of 10-14% over a cycle.
The Sugi Special Situations Strategy:
The Special Situations Strategy focuses on a single company/stock – one at a time. It is a finite-life vehicle that features deep engagement with management/ board, acting as an extension of the management team. The strategy targets a 14%+ return, with gains primarily from capital appreciation.