A 25-minute watch.   

Ryan Dobratz is portfolio manager of Third Avenue’s Real Estate Value Fund, and talks Andy Brown through the fund’s ‘uncommon approach’, the liquidity question hanging over property at the moment, and which types of property investments compound capital the best over the long term.

Probably one of the most important features is that this isn’t a direct property fund with cumbersome assets: the fund invests in the liquid shares of listed real estate companies, looking for high quality assets at discounts when stocks are out of favour. On average, the holding period is around 4 – 5 years.

Performance has been consistent – around 10% annualised over a 20 year period – with the manager believing the strategy of pouncing on value opportunities during market dislocations contribute strongly in this regard.

They also favour operating companies in property rather than real estate investment trusts (REITs), as these can retain more capital in the good years and compound much more tax efficient capital appreciation over time. At the moment, around 75% of the fund is invested in operators.

Also discussed in the interview is how the fund moves around an investment’s capital structure depending on stress, and where the problems in retail property are and aren’t.

Ryan also gave us a quick 3 Questions here.