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TR Property Investment Trust
Investment trust
This trust invests in the shares of property companies of all sizes, typically within Europe and the UK. It will also have a small amount invested in physical property in the UK. Its managers look for well-run businesses in sectors including retail, office, residential, industrial property and alternatives (which includes student accommodation, self-storage and healthcare). The trust has a history dating all the way back to 1905, although it became a real estate specialist vehicle in 1982.
Our opinion
Marcus is a very experienced manager with a strong track record who has the benefit of a well-resourced and dedicated team. The trust’s share price tends to be volatile, but this volatility has been well rewarded by the returns achieved over the long term. Given its focus on property shares, the trust could make an excellent complement to a bricks and mortar portfolio. We do not see any reason why Marcus and his team cannot continue to deliver good long-term returns for shareholders.
Trust manager
The TR Property Investment Trust team is one of the largest pan-European real estate equity teams. Under the Bank of Montreal (BMO) Asset Management umbrella, they also run a number of other property portfolios and open-ended property equity funds.
Marcus Phayre-Mudge manages this trust and Alban Lhonneur assists as deputy. The pair also run the Elite Rated BMO Real Estate Securities fund, as both brands are owned by Bank of Montreal. Marcus is a qualified chartered surveyor and has a Bachelor of Science (Hons) in Land Management from Reading University. He has been involved in property investment since 1992. Alban’s career in property started in 2006, and his prior roles include equity research at Citigroup Global Markets Société Générale Securities. George Gay has been the direct property fund manager on the portfolio since 2008.
Property is a fairly niche investment, but I like to remove the noise and keep things simple - the world is my investment universe and well-run property businesses are what I seek.
Marcus Phayre-MudgeTrust manager
Investment board
The six-member board is headed by Hugh Seaborn, who was appointed chairperson in 2016 and has served on the board since 2007. A chartered surveyor, Hugh has considerable experience in the property industry and is currently chief executive of the Cadogan Estate. He is also chairperson of the Knightsbridge Business Group. The other board members are David Watson, Simon Morrison, Tim Gillbanks, Kate Bolsover and Sarah Jane Curtis. The board meets six times per year and takes an active interest in protecting shareholders and ensuring the manager remains within the trust’s stated investment objective. The company’s year-end is 31 March.
Investment process
Marcus has a structured but pragmatic process. He analyses how economic policies will affect property as an asset and individual property companies. He makes full use of all the members of his team to ensure every investment opportunity receives in-depth attention. Technically, the trust can invest anywhere in the world but, in practice, the focus—and the trust’s benchmark—is a pan-European index. Although the trust primarily buys property shares, the team will also have around 10% of the portfolio in physical property. This is so that they will always have first-hand information about the state of the market, without any third-party influence.
Risk
As mentioned, the trust invests primarily in property company shares and with only around 10% exposure to physical bricks and mortar. As a result, it is not only exposed to fluctuations in commercial property prices, but also to stock market volatility. However, the manager is highly experienced and his thorough investment process, along with the large number of stocks held (around 75), reduces the risk somewhat.
Gearing
The maximum gearing allowed is 25% of the portfolio value. The board monitors this gearing to ensure it remains within the limits set and continues to be in the interest of shareholders. Net gearing currently stands at 12% (4 February 2020). In 2019, the Board entered into a new agreement for a £20m loan facility, which it says will allow them to move the gearing towards its upper limits if it feels this is advantageous.
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