3. How would you structure the analysis of a listed/unlisted company/fund for an institutional investor?

1. Financial and Accounting Analysis

2. Valuation Metrics

3. Capital structure and liquidity

4. Business strategy and market position

5. ESG and risk

6. Consensus and catalysts

7. Presentation and use of Analysis

• Key accounting metrics: rental income, admin expenses, interest payable, gross asset value, net debt / LTV

• Listed: EPS, Dividends per share, NAV per share

• Unlisted: capital commitments, CF-timing, target IRR’s

Sell Side

• NAV-based:

  • Typically used for REITs with a focus on Asset value, especially niches or high-quality portfolios like SEGRO (trades at NAV premium due to high logistics demand)

• Earnings-based:

  • Typically used for growth REITs with dynamic management, like Derwent London or Tritax Big Box, during expansion phases to justify valuation premiums

• Income-based:

  • Typically used for long-income REITs like Supermarket Income REIT (RPI linked leases to strong tenants – ideal for DDM)

Buy Side

• Adjusted NAVs, Scenario analysis, Relative valuation across peer group (P/NAV, DY, Debt levels) for over-/underweight calls (cheap or expensive relative to peers) 

  -> assumptions more cautious and strategic

Unlisted funds:

• NAVs derived from appraisal-based valuations (quarterly/semi-annually)

• Return analysis focuses on gross and net IRRs, fee-adjusted performance, and cash flow distributions

• Use style classification (Core, Core Plus, Value Add, Opportunistic) to contextualise returns and risk

• Analyse debt structure, leverage, maturity profile, and hedging policies to evaluate the vehicle’s risk

• Listed: Consider ability to issue public equity and provide liquidity to shareholders

• Unlisted: Examine lock-up periods, and secondary liquidity constraints (whether it’s easy or hard to sell before the fund matures)

• GFC: listed REIT’s adj. faster (Derwent London) able to raise equity quickly or refinance whereas unlisted faced redemption freezes and valuation lags

1. Strategic Focus

   • Income-driven → Supermarket Income REIT (SUPR)

   • Growth-oriented → Derwent London (development-led offices)

   • Mixed strategy → Landsec (core + office/retail redevelopment)

2. Sector Allocation

   • Assess sector weightings and spot trends → e.g. urban logistics, life sciences

3. Geographic Exposure

   • Domestic REITs → Derwent London, SUPR

   • International REITs → Realty Income, URW (Unibail-Rodamco-Westfield)

   • Concentration → Vonovia (residential-heavy), SUPR (food retail)

   • Diversified → Landsec (multi-sector UK exposure)

4. Pipeline Analysis

   • Look at planned developments, acquisitions/disposals, capital deployment

5. Asset-Level Quality

   • tenant strength, lease duration, void rates, and ESG performance

6. Track Record

   • NAV & earnings growth vs peers

   • Cyclical vs stable performance pattern -> Segro outperformed benchmark vs. Landsec underperformed during COVID and now repositioned

7. Global Context

   • Is it a sector leader, innovator, or benchmark constituent? Niche/local or globally relevant?

   • Tritax started as a specialist aggregator focused on logistics, gradually scaling to become a sector leader through capital recycling and acquisitions

8. (For Unlisted Funds)

   • Assess business plan: buy-and-hold, repositioning, opportunistic

   • Review governance: advisory board rights, reporting quality

• Analyse climate-related risks, retrofit needs, and certifications

• Review GRESB scores, carbon targets, and alignment with investor ESG policies

• Listed lead on ESG strategy due to investor pressure (REITs issuing green bonds or retrofitting portfolios)

• Unlisted increasingly report GRESB scores and capex alignment with carbon targets 

• Catalysts: What key catalysts affect the share price/NAV over the next 12 months?

  • For example: letting a major development, completing a sale process, refinancing, or management change.

• Market consensus: What is the general market view of the company/fund?

• Sell-side: external clients, short-term recommendations and target prices using simplified models and optimistic assumptions

• Buy-side: institutional investor directly, portfolio allocation decisions, consider relative values, use stress tests, and different macro scenarios