‍

Dear Fellow Shareholders,

We are pleased to provide you with the Third Avenue International Real Estate Value Fund (the “Fund”) report for the quarter ended September 30, 2026. The Fund delivered a return of -1.46% (after fees) for the quarter, outperforming the MSCI ACWI ex USA IMI Core Real Estate Index¹ (the “Index”), which returned -4.33% over the same period. Year-to-date, the Fund has returned -2.87%, compared with -6.24% for the Index. Over the last 10 years, the Fund has outperformed the Index by 5.61% per year (after fees).

The modest declines in international listed real estate share prices during the quarter were largely due to higher interest rates and ongoing energy flow disruptions in the Middle Eastand Russia/Ukraine. This extends a period in whichvaluations have moved sideways, or lower, even as the underlying earnings of the Fund’s holdings have continued to compound higher. Fund Management used this weakness to concentrate capital in its highest-conviction opportunities, adding to four existing positions where discounted valuations and identifiable catalysts are most compelling, while trimming several holdings that have generated strong returns. In addition, private capital continued to recognize the value disconnect, as Fund holding Ingenia Communities Group received multiple all-cash privatization proposals from affiliates of private equity firm Warburg Pincus.

Against this backdrop, International real estate remains a compelling opportunity in our view, with the Fund’s very well capitalized holdings trading at 10 times earnings on a weighted-average basis, roughly half the valuation multiple of U.S. REITs, despite seemingly better earnings growth. Fund Management believes this valuation gap is unprecedented and unsustainable, with the Fund positioned to benefit as it closes. With equity markets increasingly concentrated in a narrow AI thematic, the Fund’s focus on fundamental real non-U.S. dollar assets offers a potential return stream that is independent of the volatility in the AI cycle. This is supported by the Fund’s current very low correlation to tech dominated equity markets.³

‍

ACTIVITY

There were no new investments during the quarter. Instead, Fund Management directed capital towards four existing holdings — Ingenia Communities Group, Warehouses De Pauw, Savills, and SUNeVision — each of which reinforces one of the Fund’s core investment themes.

Within the Fund’s undersupplied residential theme, Fund Management increased the position in Australian-listed Ingenia Communities Group (“Ingenia”), the country’s largest owner, operator and developer of affordable land-lease lifestyle communities and holiday parks. In August, Ingenia proposed the acquisition of Western Australian residential land developer Peet Limited (“Peet”), which controls more than 26,000 lots across over 40 projects nationally. Fund Management views the transaction favorably as Peet’s land bank provides a long runway to convert an estimated 5,000–7,000 lots into land-lease communities, materially extending Ingenia’s development pipeline at an attractive cost and supporting future returns. The market seemed to underappreciate the transaction, and Ingenia shares sold off following the announcement, creating an opportunity that the Fund used to increase its position at around A$3.60 per share and a substantial discount to our estimate of NAV.

Shortly thereafter, Warburg Pincus made a series of non-binding, all-cash proposals to privatize Ingenia, increasing the offer price from A$4.75 to A$5.05 and, most recently, to A$5.25 per security, conditional on Ingenia abandoning the Peet acquisition. Ingenia’s board has since granted Warburg Pincus non-exclusive due diligence; however, a transaction remains uncertain, as even under a scheme of arrangement, approval of 75% of votes cast by securityholders would be required. In Fund Management’s view, the A$5.25 proposal substantially undervalues Ingenia, particularly on a medium-term view, and the board should not recommend a transaction at these prices. Fund Management believes Ingenia can deliver a mid-teens investment IRR on a standalone basis, underpinned by structural demand drivers unique to Australian land-lease communities, which supports the Fund’s expected return from the position. It is difficult to find real estate companies that combine structural growth drivers with a high-quality management team capable of compounding growth at a rate in the teens for many years. As such, Fund Management would only support a transaction at a meaningfully higher price.

Within the Fund’s industrial/nearshoring/logistics theme, Fund Management increased exposure to Belgian-listed Warehouses De Pauw (“WDP”), a high-quality industrial and logistics owner and developer with a portfolio across Belgium, the Netherlands, and Romania, and a long history of compounding real estate value under the leadership of the controlling de Pauw family. During the quarter, WDP agreed to merge with French logistics REIT Argan, creating an approximately €13 billion pan-European logistics platform with a combined €1 billion development pipeline in execution and 3.2 million square meters of buildable land. The transaction is expected to be completed in the first quarter of 2027 and generate approximately €10 million of annual synergies. In addition, at the end of the quarter, WDP raised equity to fund expansion into Germany and Italy. With these recent deals, WDP is increasingly well-positioned for the structural drivers of European industrial demand, with growing exposure to France and Germany, where rising military spending and a renewed focus on industrial self-sufficiency should support demand, and to Romania, a key beneficiary of nearshoring toward lower-cost Europe.

Within the Fund’s deep value and special situations theme, Fund Management increased its position in London-listed Savills Plc (“Savills”). As discussed in our first-quarter 2026 letter, Savills agreed to acquire the U.S. real estate investment banking group Eastdil Secured. The acquisition closed in August, creating Eastdil Secured Savills, which the company states is now the number two advisor globally for prime commercial real estate transactions above $100 million. Recent conversations with Savills management give us increasing comfort regarding the potential of the combined group, supporting the Fund’s decision to add to the position. Despite the upside, Savills continues to trade at a 4–5 turn EBITDA multiple discount to U.S. peers such as CBRE and JLL. In Fund Management’s view, narrowing this multiple differential could generate 40–50% upside in Savills’ share price—a catalyst that could materialize in the coming periods as Savills shows evidence of the upside of the combined platform, in addition to core regions such as Hong Kong benefiting from improved fundamentals and transaction volumes.

Following on in the deep value and special situations theme, Fund Management also increased exposure to Hong Kong-listed SUNeVision Holdings (“SUNeVision”), the largest datacenter owner and operator in Hong Kong and a subsidiary of Sun Hung Kai Properties.  SUNeVision is the Fund’s only datacenter/AI exposure and represents <4% of Fund assets. Fund Management remains cautious on the global data center supply cycle and will only invest in supply-constrained markets in data centers suited to AI inference workloads, which require high connectivity and low latency. SUNeVision fits these criteria. Hong Kong benefits from scarce land, limited new supply, and its role as a regional connectivity hub, with SUNeVision’s carrier-neutral facilities at the center of this network. During the quarter, SUNeVision announced large leasing deals and accelerated its development pipeline, which should drive substantial earnings growth as its capacity, measured in megawatts, more than doubles and support the Fund’s return opportunity. Despite this growth outlook, SUNeVision trades at only 9 times earnings, another example of the valuation disconnect across the Fund’s holdings.

To fund these additions, Fund Management trimmed several holdings that have performed well, while maintaining each as a meaningful position in the Fund. In the Fund’s industrial/nearshoring/logistics exposure, core positions in Mexican owner/developer Corp. Inmobiliaria Vesta (“Vesta”) and Thai/Vietnamese industrial real estate developer Amata Corporation (“Amata”) were both trimmed. Fund Management retains high conviction in Vesta as a long-term holding and beneficiary of nearshoring to Mexico; however, the reweighting simply reflects better relative value elsewhere and helps support the Fund’s overall return opportunity. Similarly, Fund Management retains high conviction in Southeast Asia, benefiting from a ‘China plus one’ transition in supply chains. That said, since initiating a position in Amata about a year ago, shares have more than doubled. Despite the share price rally, Amata shares are modestly valued on earnings and book value ratios relative to their history, so trimming locks in gains while preserving exposure to future returns, in our view.

Within the Fund’s deep value/special situations thematic, Hongkong Land Holdings (“Hongkong Land”) was also reduced. Hongkong Land has generated high returns for the Fund as company management executed a significant turnaround. In addition to ongoing benefits from Hongkong Land’s turnaround and simplification, the company looks set to benefit from a rapidly improving central Hong Kong office market and the prospect of growth in its new real estate investment management platform. Hongkong Land remains a core holding, but at a smaller exposure given relative value found elsewhere and the return already realized.

The Fund’s Glenveagh Properties (“Glenveagh”) position was also trimmed. This high-conviction holding within the undersupplied residential theme has generated excellent returns for the Fund, and the strength of the Dublin, Ireland housing market looks set to continue. Valuation still seems attractive at ~12x forward earnings; however, with total returns of 38% per year over the last three years, the position size was trimmed.

‍

POSITIONING

Including the aforementioned activity, the Fund’s allocations remain broadly consistent with recent quarters. The Fund continues to emphasize four key thematics: (i) deep value and special situations, (ii) undersupplied residential markets, (iii) industrial/nearshoring/logistics platforms, and (iv) immature self-storage, alongside a focus on mid-cap companies and diversified geographic exposure, as shown in the following charts. The quarter’s reweighting was largely within themes rather than between them: in residential, the addition to Ingenia was partly funded by the trim of Glenveagh; in industrial, exposure shifted modestly from emerging market nearshoring (Vesta and Amata) toward European logistics (WDP); and within deep value and special situations, capital was recycled from Hongkong Land into Savills and SUNeVision. As a result, the Fund’s emerging market exposure modestly declined during the quarter.

‍

OUTLOOK COMMENTARY – IS HISTORY RHYMING?

During the quarter, Fund Management published a white paper, “Is History Rhyming? Deep value opportunities, falling correlations and non-U.S. dollar real assets for an era of fiscal dominance”. Its central argument is that today’s market setup closely resembles 1999/2000, the start of international real estate’s last major bull market. Then, as now, equity market returns were driven by a narrow group of technology leaders, while international real estate had lagged and traded at deep discounts to private market values. Over the following five years, international real estate delivered total returns of roughly 16% per year, while global equities finished below where they started.

‍

The white paper sets out the following five reasons why Fund Management believes the opportunity is unusual today:

• Narrow markets. Technology and communications now account for over half of the S&P 500, a higher concentration than at the dot-com peak.
• Historic valuation discounts. International real estate trades below 0.8 times book value, and the Fund trades at about 10 times earnings, roughly half the multiple of U.S. REITs, despite high-single-digit earnings growth.
• Falling correlations. The Fund’s correlation with the Nasdaq-100 has fallen from roughly 0.9 to below 0.2, a pattern last seen before 2000.
• Positioned for inflation. Inflation-linked rents, low leverage, and debt that has already repriced help protect the portfolio if price pressures persist.
• Non-U.S. dollar real assets. As U.S. fiscal pressures build, real assets priced outside the dollar, which remains roughly 30% overvalued on a purchasing power parity basis by some estimates, offer valuable diversification.

UNPRECENTED VALUATION DISCOUNT‍

The full report explores each one of these themes in further detail, including what an era of U.S. fiscal dominance could mean for real assets, how the Fund’s portfolio held up through the 2022 inflation shock, and the growing list of potential catalysts, from privatizations such as Warburg Pincus’s interest in Ingenia this quarter to a broader rotation of capital into real assets. If you would like a copy of the white paper, please contact clientservice@thirdave.com or access the report on our website.

We thank you for your continued support and look forward to writing to you again next quarter. In the interim, please do not hesitate to contact us with any questions, comments, or ideas at realestate@thirdave.com.

Sincerely, The Third Avenue Real Estate Value Team

Quentin Velleley, CFA Portfolio Manager