Baron Funds, an investment management company, released its “Baron Real Estate Fund” third quarter 2022 investor letter. A copy of the same can be downloaded here. In the third quarter, the fund declined 4.86% (Institutional Shares) compared to a 4.99% decline for its primary benchmark, the MSCI USA IMI Extended Real Estate Index. At the same time, the fund outperformed the MSCI US REIT Index, which fell 10.28% in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2022.
Baron Funds highlighted stocks like Rexford Industrial Realty, Inc. (NYSE:REXR) in the Q3 2022 investor letter. Rexford Industrial Realty, Inc. (NYSE:REXR) is a real estate investment trust focusing on industrial properties. On November 21, 2022, Rexford Industrial Realty, Inc. (NYSE:REXR) stock closed at $55.03 per share. One-month return of Rexford Industrial Realty, Inc. (NYSE:REXR) was 3.77% and its shares lost 22.84% of their value over the last 52 weeks. Rexford Industrial Realty, Inc. (NYSE:REXR) has a market capitalization of $10.422 billion.
Baron Funds made the following comment about Rexford Industrial Realty, Inc. (NYSE:REXR) in its Q3 2022 investor letter:
“We recently acquired additional shares in Rexford Industrial Realty, Inc. (NYSE:REXR), a high-growth real estate investment trust that owns a $13 billion portfolio of infill industrial properties concentrated in Southern California. We are optimistic about the long-term prospects of Rexford to grow cash flow at a rapid pace and generate attractive shareholder returns.
Southern California is among the most attractive markets for industrial real estate in the country, owing to the diverse set of industries that drive demand for warehouse space, and new infill development activity that is limited by a scarcity of developable land and “higher and better use” opportunities to develop land for purposes other than warehouse space.
Rexford is growing rapidly, both organically (record occupancy, rising market rents, contractual rent escalators in leases) and through acquisitions in a highly fragmented market. Rexford’s current portfolio rents are on average over 50% below market rents, which should drive outsized organic growth over the next several years as in-place leases expire and reset to market rates. In addition, we expect Rexford to continue to rapidly grow its market share (currently less than 2%) through acquisitions.
Following a more than 35% correction in its shares in the first nine months of 2022, we believe the company’s valuation is attractive relative to the high-quality nature of the platform and the significant growth we expect to see over the next several years.”
Rexford Industrial Realty, Inc. (NYSE:REXR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held Rexford Industrial Realty, Inc. (NYSE:REXR) at the end of the third quarter, which was 28 in the previous quarter.
We discussed Rexford Industrial Realty, Inc. (NYSE:REXR) in another article and shared Baron Funds’ views on the company. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
