Sustainable Property Equity
Key points:
- Focuses globally on long-term top-down trends in proptech, prime office, prime retail and lifestyle
- Proprietary ESG universe screening and ESG taken into account in determining value drivers
- Bottom-up stock selection based on in-depth fundamental, ESG and valuation analysis
Philosophy
The Sustainable Property Equity strategy invests worldwide in stocks of companies in the property sector. We believe long-term cash-flow generation in the property sector is often underappreciated, creating opportunities to add value.
We want to capture the following market anomalies:
- Underestimation of top top-line growth
- Underestimation of people’s impact on value creation
- Underestimation of true capex
Process
Our investment process consists of four steps. The first involves identifying the investable universe within global listed real-estate growth. The second is the top-down identification of trends that offer strong growth through better execution and/or active management.
- Proptech: an increased demand for high-tech and specialized assets. Underlying secular growth and barriers to entry are high.
- Prime offices: companies tend to move to the central business districts. Tenants want to cluster together.
- Prime retail: ecommerce drives the split between prime and non-prime retail. Prime retail has unique location, high entry barriers and is part of the multichannel strategy.
- Lifestyle: there is a housing shortage and an increased demand for rental housing. A social shift to tenant lifestyles and tightening lending conditions are driving growth.
The strategy uses a sustainability performance ranking to narrow down the universe. In the third step, the portfolio managers conduct in-depth fundamental, ESG and valuation analysis. The team has fully integrated ESG criteria into its investment analysis and decision-making process.
The fourth and final step involves the construction of the portfolio, based on conviction levels and investment guidelines. The resulting portfolio has a better ESG profile and significantly lower environmental footprint than the index.
Team
The Sustainable Property Equity strategy is managed by the Property portfolio management team, which consists of two veteran portfolio managers. These highly experienced investment professionals are part of the Global Developed Sustainable Equities team and also work with Robeco’s trends, emerging markets and sustainability analysts.
