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Global Real Estate Q3 2021 Commentary

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Global real estate stocks posted a modest loss in the third quarter of 2021, following strong gains in the first half of the year. Investment returns were weighed down by macroeconomic concerns, including rising inflation, a sharp uptick in European energy prices and the Evergrande debt challenge in China. The FTSE EPRA Nareit Developed Index (the “Index”) had a total return of -0.73% for the quarter, while the Easterly Global Real Estate Fund (the “Fund”) generated a total net return of -1.47%, underperforming the Index by 74 basis points.

Despite the continued success of the global vaccination roll-out and evidence that the existing vaccines provide substantial protection against the Delta variant, investor enthusiasm was dampened over the quarter by exogenous risk factors confronting the market, notably:

  • Concerns over the global ramp in inflation
  • Rising energy prices driven by supply constraints in Europe
  • The risk of Chinese property developer Evergrande defaulting on its debts, prompting concerns of a “contagion effect” spilling over into the capital markets
  • Increasing regulatory risk in China

As headline risks captured investor attention during the quarter, industry fundamentals and stock-picking were overwhelmed by a flight to the benchmark. Against this backdrop, the market favored lower-quality benchmark constituents, imposing headwinds on portfolios managed with high levels of Active Share, such as our own.

Attribution Of The Fund’s Q3 2021 Performance

The most notable contributors and detractors to the Fund’s relative performance over the second quarter are outlined below:

  • The Fund’s stock selection in the Lodging sector, including its exposure to blue-chip hotel brands and operators which have benefited from the re-opening of the global economy and business travel, was a contributor to relative returns vs. the benchmark. The Fund also benefited from its stock selection in Timber and Life Science/Lab Space, both Specialty property types.
  • The Fund’s stock selection in Data Centers, a Specialty property type, was a detractor to relative returns, as a high-quality Hong Kong holding was weighed down by exogenous concerns over the impact of increasing regulation in China.


Our outlook for the global real estate market continues to be constructive. Real estate fundamentals and earnings growth remain strong amidst an environment characterized by low supply in many sectors, paired with high construction costs.

Further, as investors continue to debate whether the recent surge in inflation rates is structural or a transitory response to supply bottlenecks caused by the pandemic, it is noteworthy to consider that real estate values tend to increase with inflation, as rising inflation is typically an indicator of a growing economy – the most important driver of returns for most property types. Additionally, commercial real estate leases often incorporate annual rent escalators, providing additional protection of real estate cash flows during inflationary periods.Our high conviction, benchmark-agnostic investment approach allows us to maintain a laser-focus on identifying and owning only the 50 highest-quality companies in our investable universe. We have high conviction in our fundamental research and confidence in the management teams of the companies we own.  While global capital markets continue to experience transitory periods of market fixation on non-fundamental factors, our portfolio is well-positioned to recover as investor attention turns back to fundamentals.

9/30/2021 YTD 1-Year 3-Year 5-Year 10-Year SI Date
I Shares 16.12% 34.98% 10.98% 10.71% 11.92% 9.43% 8/1/11
Morningstar Global Real Estate Category 13.26% 26.73% 7.58% 5.98% 8.61% 6.00%
Developed Index
15.26% 30.81% 7.18% 5.51% 9.27% 7.01%

Source: Morningstar Direct. Performance data quoted above is historical. Past performance does not guarantee future results and current performance may be lower or higher than the performance data quoted. The investment return and principal value of an investment will fluctuate, so that shares when redeemed may be worth more or less than their original cost. Investors cannot directly invest in an index, and unmanaged index returns do not reflect any fees, expense, or sales charges. For performance information current to the most recent month-end, please call 888-814-8180.

The Fund’s management has contractually waived a portion of its management fees until March 19, 2023 for I, A, C and R6 Shares. The performance shown reflects the waivers without which the performance would have been lower. Total annual operating expenses before the expense reduction/reimbursement are 1.19%, 1.44%, 2.19% and 1.21% respectively; total annual operating expenses after the expense reduction/reimbursement are 1.05%, 1.44%, 2.19% and 0.95% respectively 1. 5.75% is the maximum sales charge on purchases of A Shares.

1 The Fund’s investment adviser has contractually agreed to reduce and/or absorb expenses until at least March 19, 2023 for I, A, C and R6 Shares, to ensure that net annual operating expenses of the fund will not exceed 1.04%, 1.69%, 2.37% and 0.94%, respectively, subject to possible recoupment from the Fund in future years.

The FTSE EPRA Nareit Developed Global Real Estate Index is comprised of publicly-traded REIT securities in developed countries worldwide which have met certain financial criteria for inclusion in the Index. Each company must derive the bulk of its earnings through the ownership, management or development of income-producing commercial real estate.


About the Author, Andrew J. Duffy, CFA®:

Andrew Duffy is the Senior Portfolio Manager of the Easterly Global Real Estate Fund, a mutual fund that invests in publicly-traded global REIT securities. Mr. Duffy has more than 29 years of global real estate securities investment experience.

Mr. Duffy co-founded Ranger Global Real Estate Advisors, LLC in 2016 and serves as the Chief Investment Officer. Previously, he served as the Senior Portfolio Manager with Ascent Investment Advisors. Prior to joining Ascent Investment Advisors, Mr. Duffy was a Managing Director with Citigroup Principal Strategies, where he managed a long/short portfolio of global real estate securities. From February 2005 until January 2008, he was with Hunter Global Investors, L.P. where he was the Co‐Portfolio Manager of the Hunter Global Real Estate Fund, LP. Before that he was a portfolio manager at TIAA‐CREF for more than six years, during which time he was directly responsible for managing more than $3 billion in global real estate equity and debt securities. Between 1993 and 1999, Mr. Duffy was a Senior Research Analyst at Eagle Asset Management, where he launched and managed a dedicated real estate securities investment program.

Prior to his career in investments, Mr. Duffy served for five years as an officer in the United States Army, where his assignments included serving in the 7th Special Forces Group and the 82nd Airborne Division. Mr. Duffy received a BS from the United States Military Academy at West Point in 1979 as a Distinguished Graduate (top 5% of class) and an MBA from Harvard Business School in 1986. He earned the Chartered Financial Analyst® designation in 1996.


Risks & Disclosures

Past performance is not a guarantee nor a reliable indicator of future results. As with any investment, there are risks. There is no assurance that any portfolio will achieve its investment objective. Mutual funds involve risk, including possible loss of principal. The Easterly Funds are distributed by Ultimus Fund Distributors, LLC. Easterly Funds, LLC and Ranger Global Real Estate Advisors, LLC are not affiliated with Ultimus Fund Distributors, LLC, member FINRA/SIPC. Certain associates of Easterly Funds, LLC are registered with FDX Capital LLC, member FINRA/SIPC.

There is no assurance that the portfolio will achieve its investment objective. The Fund is subject to stock market risk, which is the risk that stock prices overall will decline over short or long periods, adversely affecting the value of an investment.  Risks of one’s ownership are similar to those associated with direct ownership of real estate, such as changes in real estate values, interest rates, cash flow of underlying real estate assets, supply and demand and the creditworthiness of the issuer. International investing poses special risks, including currency fluctuations and economic and political risks not found in investments that are solely domestic.  Incorporating alternative investments into a portfolio presents the opportunity for significant losses including in some cases, losses which exceed the principal amount invested. Also, some alternative investments have experienced periods of extreme volatility and in general, are not suitable for all investors. Asset allocation and diversification strategies do not ensure profit or protect against loss in declining markets.

Easterly Funds, LLC serves as the Advisor to the Easterly family of mutual funds and related portfolios. Their form ADV can be found at Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see prospectus, or if available, a summary prospectus containing this and other important information. Read it carefully before you invest or send money. Mutual Funds are distributed by Ultimus Fund Distributors, LLC. Members of FINRA and SIPC.

Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund. This and other information is contained in the Fund’s prospectus, which can be obtained by calling 888-814-8180 and should be read carefully before investing. Additional Fund literature may be obtained by visiting

As with any investment, there are multiple risks associated with REITs. Risks include declines from deteriorating economic conditions, changes in the value of the underlying property and defaults by borrowers, to name a few. Please see the prospectus for a full disclosure of all risks and fees.