Immobilier 21

Investment rationale

IMMOBILIER 21 is a French UCITS equity fund designed to give long-term exposure to listed real estate companies in the Eurozone, with a recommended holding period of more than five years. Its objective is to achieve the best possible performance both in absolute terms and relative to the listed property market, while also pursuing ESG Climate performance. The fund is aimed at investors seeking exposure to Eurozone listed real estate and who understand the risks inherent in equity markets; A shares are intended more particularly for private individuals and I shares for institutional investors. Given its concentrated, sector-specific exposure to quoted property companies and possible small-cap bias, it is a distinct and specialized choice rather than a broad diversified equity allocation.

How the strategy works

The fund is classified as Eurozone equities and invests mainly in listed real estate companies in order to provide indirect exposure to the property sector and to the rents received by Eurozone listed property companies. It maintains exposure of at least 75% and up to 100% of net assets to Eurozone real estate equities, may invest up to 10% in non-Eurozone equities, up to 25% in Eurozone investment-grade debt securities and money-market instruments, up to 10% in units or shares of UCITS/FIA/trackers/ETFs, and may hold up to 10% cash. It may use listed futures and options up to 100% of assets for equity-risk hedging, and may hold up to 10% in embedded-derivative instruments such as warrants, subscription rights, allocation rights and convertible bonds; securities lending and repo/reverse repo operations are limited to 10% of assets. The reference index is the FTSE EPRA Nareit Eurozone Capped Net Return index, used as an ex-post comparison only, with portfolio weights set by management conviction and potentially diverging significantly from the index. The fund offers capitalisation shares (IC, AC) and distribution shares (ID, AD), is SFDR Article 8, and the recommended investment horizon is more than five years.

Investment philosophy

• The investment universe is a focused set of about 70 Eurozone listed real estate companies that the management team actively follows and has historically analyzed in depth; portfolio construction can result in a limited number of holdings, potentially 25 to 30 stocks.

• Stock selection combines financial and extra-financial analysis. Financial criteria include balance sheet strength, cash flow, growth, valuation, property portfolio positioning by asset type and geography, management quality, and comparative valuation based on sustainable cash flows.

• The process has a clear value/cash-flow bias: GESTION 21 emphasizes the capacity of companies to generate solid and durable results, while expected growth plays only a limited role apart from organic growth. The firm also uses proprietary indicators, including a prospective vacancy-rate measure and a critical interest-rate indicator that identifies the theoretical rate level at which cash flow becomes nil.

• ESG is integrated directly into security analysis and line sizing through an internal rating tool combining quantitative and qualitative scoring. The Environment pillar is overweighted at 60%, with Social and Human Rights at 20% and Governance at 20%; the quantitative score is based on eight indicators, including carbon intensity, energy efficiency, certified surface area, training metrics, Global Compact signature, ESG-linked executive pay and board attendance.

• The fund commits to maintaining a weighted average ESG score above a reference universe adjusted for the worst 20% ESG scores, with ESG score coverage above 90% of the portfolio and assets without ESG analysis limited to 10%. It also targets a higher level of environmental certification than the universe and aims to outperform its reference universe on carbon intensity, greenhouse-gas intensity and gender diversity in governance bodies, while respecting asset-level limits on non-Eurozone equities, debt securities, embedded derivatives, borrowing and temporary securities transactions.

Distinctive features

A defining feature of IMMOBILIER 21 is its narrow specialization in Eurozone listed property companies combined with a concentrated portfolio built from a deeply researched universe of around 70 names. The process also stands out for its proprietary real estate indicators, notably the prospective vacancy-rate measure and the critical interest-rate measure, which are tailored to listed property companies. The fund’s ESG method is explicit, with a 60% weighting to the Environment pillar, climate-oriented objectives, and portfolio-level commitments on ESG score, certifications, carbon indicators and governance diversity. The fund also has a detailed liquidity framework, including redemption settlement three business days after order centralisation, daily and monthly liquidity monitoring, restrictions on new investments in companies whose market capitalization is below fund size, and a discretionary gate mechanism that may be activated if net redemption requests on a valuation date exceed 5% of net assets.

Risks

The fund carries a risk of capital loss, as it offers no capital guarantee. Its main structural risks come from equity-market exposure of at least 75% and up to 100% to listed real estate shares, creating both general equity risk and sector concentration risk tied specifically to property stocks. Liquidity risk is relevant because the portfolio may invest in small-cap companies and its investment process can result in a concentrated portfolio of 25 to 30 holdings, which may force sales at lower prices when market demand is insufficient. Additional risks are discretionary management risk, currency risk on non-Eurozone exposure capped at 10%, interest-rate risk and credit risk on the debt and money-market bucket limited to 25%, sustainability risk under SFDR, and risk linked to ESG integration, which may affect returns on the financial instruments held.

Asset manager

The management company is GESTION 21 SA, located at 8 rue Volney, 75002 Paris. It is a portfolio management company authorized by the AMF on 31 July 2007 under number GP-07000020. GESTION 21 manages and distributes the fund and has a long-standing specialization in deep analysis of around 70 listed real estate companies in the Eurozone. It is also the contact point for annual and periodic reports and ESG-related documents.