SGH LaSalle Concentrated Global Property Fund update – Q2 2025

SGH LaSalle Concentrated Global Property Fund update: Resilience and revaluation in a volatile quarter

In this SGH LaSalle fund update, Portfolio Manager Matt Sgrizzi recaps the June 2025 quarter. He outlines steady performance amid market turbulence. The team made portfolio shifts following tariff-related volatility. They remain focused on undervalued sectors, including life science offices, healthcare, cold storage, and data centres. The SGH LaSalle Concentrated Global Property Fund holds 10–20 high-conviction global REITs, targetting durable cash flows, attractive yields, and strong downside protection.

Watch/Listen to the Q2 2025 SGH LaSalle Concentrated Global Property Fund update ⏬:

 

Transcript

Market context – tariffs and volatility

The global capital markets had quite a rollercoaster ride in the quarter. Trump tariffs created one of the greatest uncertainty shocks we’ve ever seen. And then markets steadily looked through their impact and climbed a wall of worry in surprisingly short order.

After all this, the GREIT market ended the quarter up about 2.5% and our fund performed about in line with that. Our fund delivered a solid return over the past fiscal year through June, up about 9%, and continued to outperform the universe of GREITs, adding to our stellar since inception, relative performance of about 600 basis points, annualised, or cumulatively, 40 percentage points.

Current portfolio positioning

The portfolio invests only in the top 10 to 20 real estate opportunities we identify globally. We see particularly attractive value in markets like Canada and Europe today, which trade around all-time low relative valuations compared to the US. We also see attractive opportunities in non-traditional real estate sectors, such as cold storage, cell towers, billboards, and life science.

Companies in these sectors trade at really undemanding valuations, having been high flyers in the real estate sector fairly recently, but they’ve had a significant fall from grace more recently. And we think expectations are pretty washed out for a number of companies in these sectors. That said, we also have large positions in the data centre and healthcare sectors, which are posting the best growth prospects among real estate companies globally.

Key valuation metrics

To show you some high-level information on our portfolio positioning today, you can see in the image below that we hold just 20 stocks in the portfolio with an attractive dividend yield of 4.8%. Very strong forecast and growth of 3.8% per year. That’s unlevered operating income. We have modest leverage of 36% total liabilities to total assets, a very attractive implied cap rate on the real estate assets of 7.6%.

And a significant discount private market values were NAV of 18%. We also see a large discount to our primary valuation metric, what we call intrinsic value of 11%, which is derived from our capital market-based discounted cash flow model that values companies as going concerns. We underwrite to an attractive 15% annualised return for this portfolio on a three-year hold as well, reflecting the high in-place yields and growth for the companies in the portfolio.

Source: LaSalle Investment Management

 

Please also note that, especially in terms of our key valuation metrics of intrinsic value and expected return, the portfolio is significantly more attractive than the universe of GREITs, represented by the FTSE Index in the image above. On the right, you can see the country and sector exposures. I’d especially note the high level of diversification across unique property sectors.

Quarterly portfolio changes

The most material change we made in the quarter was to add some risk and US exposure back into the portfolio. This was in the immediate aftermath of Trump’s Liberation Day tariff announcements. The US pretty sharply underperformed at that time. We did that by adding a life science office REIT to the portfolio.

This sector once traded at a material premium to the beleaguered traditional office sector. But now it trades at a wide discount. It’s not totally unjustified. There are higher levels of supply of life science. There are some policy headwinds, and leasing activity has been a bit weaker in the sector lately.

However, we believe the factors that make life science special in the US, such as deep access to capital and talent, low taxes, and a large or wealthy addressable market, will ultimately endure. And as supply winds down in the sector, pricing power will return to these landlords. We also swapped preferences in Japan, continental Europe, small caps, and Canadian retail. We also notably took advantage of an over-hyped concern in the US healthcare REITs tenant profile, adding a new company to our portfolio there.

Why invest in the SGH LaSalle Concentrated Global Property Fund?

We have three key reasons to invest in the fund today:

First, REITs are underowned and trade at undemanding valuation levels compared to equities. Not to mention, REITs’ special attributes, such as attractive income, durable cash flows, falling supply levels, low leverage, and strong operating platforms. All of these factors, overlooked for years, could come back into heavy favour.

Second, the outlook for real estate fundamentals is quite solid, underpinned by several dynamic real estate sectors. These are enjoying strong pricing power, and limited or declining levels of competitive supply. REITs are also in very strong capital positions and poised to grow their market share compared to private investors.

Third, the track record of this fund has been very strong, as shown in the chart below. We’ve outperformed significantly with a cumulative alpha of about 40 percentage points, with lower risk than the benchmark. We’ve proven our ability to outperform in up and down markets, even with a high-conviction concentrated portfolio, and over what’s been a fairly challenging period over the past couple of years.

Source: LaSalle Investment Management

Focus on quality and conviction

All of this is due to our unrelenting focus on investing only in the best opportunities we see in the global real estate markets. We expect to continue proving that we can help investors navigate global markets while retaining the many benefits of including liquid real estate in their portfolios.

*The text has been edited for clarity.

For more information about the SGH LaSalle Concentrated Global Property Fund, click HERE. Follow us on LinkedIn.

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Disclaimer

This fund update has been prepared by SG Hiscock & Company (SGH) to provide general information only and is not intended to take the place of professional advice. It does not take into account the investment objectives, financial situation or particular needs of any particular person.

Equity Trustees is the responsible entity for the SGH LaSalle Concentrated Global Property Fund. Neither SGH, Equity Trustees nor any of its related parties provide any warranty of accuracy. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product. Follow the link for the full disclaimer: https://sghiscock.com.au/podcast-disclosures-and-disclaimers/.