TIAA-CREF Real Estate Fund Commentary – Q4 2021
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 49bps.
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Overview
In the fourth quarter of 2021, TIREX underperformed the benchmark (FTSE Nareit All Equity REITs Index) by 62bps, almost entirely due to a single position: GDS Holding. During the quarter, the fund reduced the number of holdings as valuations became extremely elevated around Covid-sensitive property types and regions (ie. lodging and resorts). Inflation-sensitive properties like health care were also reduced. Most of these sells were reallocated towards industries that are expected to strongly rebound in a post-pandemic world, such as manufactured homes and shopping centers.
Q4 2021 Summary
- TIREX returned 15.55%, while the FTSE Nareit All Equity REITs Index returned 16.17%
- Contributors
- Industrial REITs Rexford Industrials Realty, Inc. and Terreno Realty Corp.
- Regional mall REIT Simon Property Group, Inc.
- Detractors
- China-based data center GDS Holdings Ltd.
- Not owning industrials REIT Duke Realty
- Australian-based industrial housing REIT Ingenia Communities Group
2021 Performance Comparison
[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