Baron Real Estate Fund: Latest Insights and Commentary

The Review and Outlook for period ending June 30, 2025, is not yet available.

CONTRIBUTORS

• Brookfield Corporation is a global investor in real estate, infrastructure, renewable power, private equity, and credit, with $1 trillion in assets under management. Shares contributed to performance on strong capital deployment, fundraising momentum, and improving values of real estate investments held on its balance sheet. We continue to own the company given its strong asset management platform, which offers high earnings visibility, along with its global capital deployment capabilities.
• Wynn Resorts, Limited is a global luxury resort operator with properties in Las Vegas and Macau and a new integrated resort under development in the UAE. Shares rose during the quarter due to an in-line outlook for Las Vegas, accelerating growth in Macau, and continued progress on the UAE project. Early in the quarter, the stock came under pressure due to concerns about tariffs and a potential trade war with China, as well as fears of a consumer slowdown and political risk weighing on Macau valuations. However, Macau trends improved meaningfully, with gross gaming revenue up double digits year over year through May, compared to low single-digit growth earlier in the year. In Las Vegas, management highlighted stable demand from VIP customers, ongoing investment in food and beverage, and strong group bookings extending through 2026. We remain constructive on Wynn’s long-term prospects, given its differentiated positioning in Las Vegas and the earnings potential of the new UAE development.
• Brookfield Asset Management Ltd. is a leading alternative asset manager that was spun out from Brookfield Corporation in December 2022. Shares contributed to performance on continued strong fundraising despite a volatile macroeconomic and geopolitical environment, as well as improving margins and growth in fee-related earnings. We retain conviction due to the company’s diversified asset base, sustainable cash flows, strong asset management platform, and global capital deployment capabilities.

 

DETRACTORS

• Churchill Downs Incorporated operates live and historical racing entertainment venues, online wagering businesses, and regional casino gaming properties in the U.S. Shares declined during the quarter following an earnings release that highlighted weakening trends in the Virginia market and lower-than-expected Kentucky Derby earnings. The company also indefinitely delayed a major Kentucky Derby expansion project and offered limited guidance on whether it would redirect the freed-up capital toward share repurchases. While the company is pursuing several growth projects with attractive long-term prospects, these initiatives will take time to ramp to full profitability, and leverage remains elevated. We believe the Virginia market and the company’s broader regional gaming portfolio are likely to remain under pressure. Given intensifying competition and an uncertain business outlook, we exited the position.
• Prologis, Inc. is the largest owner and operator of industrial warehouse real estate in the world. Shares declined during the quarter due to a slowdown in leasing demand, driven by heightened uncertainty around global tariffs and trade policies. We see this as a temporary headwind, with pent-up demand likely to be released once macroeconomic pressures ease. We believe Prologis’ multi-year growth outlook remains compelling given its scale, strategic locations, and best-in-class operations. We also view the current valuation as attractive.
• ​Independence Realty Trust, Inc. (IRT) owns 33,000 apartment units that cater to a more affordable income demographic. Shares declined during the quarter due to broader economic concerns, including the potential impact of tariff polices on lower-income consumers, softer-than-expected pricing power on new leases, and mixed investor reception of select strategic acquisitions. We retain conviction in IRT due to its superior management team, high-quality portfolio in select markets, and demonstrated ability to drive outsized earnings growth through its value-add program.