TIREX Commentary – Q2 2020
Thesis
TIREX utilizes fundamental research to find properties in high barrier markets, with higher occupancy and rent growth. By focusing on quality companies and avoiding unnecessary risks, the fund obtains a strong track record that has outperformed the benchmark and REIT ETF over time. We continue to hold TIREX because of the team’s growth focus with asset concentrations in supply constrained markets. Lastly, TIREX was the lowest cost active manager screened, at 51bps.
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Overview
In the second quarter of 2020, TIREX outperformed the benchmark (FTSE Nareit All Equity REITs Index) by 11bps, driven by strong stock selection in single-family home, office, and data center REITs. Allocation to the lodging property sector also contributed to positive returns. Underweights to retail and infrastructure REITs partially offset these gains, though. In general, REITs closely related to a “stay-at-home” economy benefited most.
Q2 2020 Summary
– TIREX returned 13.36%, while the FTSE Nareit All Equity REITs Index returned 13.25%
– Contributors
o Overweight to Invitation Homes, Inc. – single-family rental REIT
o Underweight to Digital Reality Trust – data center REIT
o Underweight to Public Storage – self-storage REIT
– Detractors
o Overweight to Rexford Industrial Realty – industrial properties
o Overweight to Hudson Pacific Properties, Inc – office REIT
o Underweight to Simon Property Group – regional mall REIT
Optimistic Outlook
– We continue to hold this fund and believe in our thesis due to the fund’s goal to obtain long-term alpha through capital appreciation and current income
– By having a research-oriented investment process that focuses on cash flows and asset values we believe TIREX will continue to outperform its benchmark long-term
– The managers are effective when it comes to understanding and preparing for changes to the REIT landscape and where long-term sustainable growth exists
[Category Mutual Fund Commentary]
Micah Weinstein
Research Analyst
Direct: 617.226.0032
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109