TRADE ALERT - International Portfolio July 2026 (Selling a Position)
We are issuing a trade alert today to let you know that we are selling our position in SEGRO plc.
Before getting into the details of the trade, I want to take a small victory lap.
This is already our fifth buyout of 2026.
First, National Storage REIT received a buyout offer.
Then came Whitestone REIT.
Then Sila Realty Trust.
Then Caesars Entertainment.
And now SEGRO.
This is not a coincidence.
We have said for a while that M&A activity would likely accelerate across listed real estate companies because valuations had become far too low relative to private market values. Strategic buyers, private equity firms, and other well-capitalized investors are now taking advantage of the public market’s excessive pessimism.
And we are benefiting from that.
Time and time again, we have managed to identify potential buyout targets before the deals were announced. This has now become an important source of value creation for our portfolios.
SEGRO is yet another example.
We bought SEGRO because we believed that the market had become far too pessimistic about European industrial real estate. Investors were worried about interest rates, economic weakness, and a temporary slowdown in leasing activity. But we thought that the market was missing the bigger picture.
SEGRO owns a high-quality logistics portfolio in some of the best European markets. These assets are difficult to replicate, benefit from long-term demand growth, and remain very valuable in the private market.
Prologis clearly agreed.
And this was not Prologis casually testing the waters. This was reportedly Prologis’ fourth proposal. SEGRO had already rejected three previous approaches before Prologis finally came back with a “best and final” offer that the board was willing to recommend.
That matters. Prologis is not some small financial buyer. It is the largest and most sophisticated industrial landlord in the world. It knows this asset class better than anyone, and yet it was willing to repeatedly increase its offer to acquire SEGRO.
In my view, this says a lot about the value of SEGRO’s portfolio and, more broadly, about the discount that still exists in European industrial REITs.
The public market had been pricing SEGRO as if European logistics real estate had permanently lost its appeal. Prologis clearly disagreed. It saw value where the public market saw risk, and it was willing to pay a large premium to gain control of the platform.
That is a strong validation of our thesis.
Why We Are Selling Now
We are selling because most of the upside has now been realized.
Prologis is offering 0.0920 Prologis shares for each SEGRO share, with a capped partial cash alternative. This means that from here, SEGRO is no longer really trading based on its own fundamentals. It is now mostly tied to the value of Prologis shares and the closing of the merger.
If Prologis shares go up, SEGRO should generally benefit.
If Prologis shares go down, SEGRO should generally fall as well.
In other words, holding SEGRO from here increasingly becomes an indirect bet on Prologis.
That is not what we originally signed up for.
We bought SEGRO because we believed it was an undervalued European industrial REIT with a high-quality portfolio, attractive long-term growth prospects, and upside as the market eventually recognized its value.
That thesis has now played out much faster than expected through a buyout.
But we do not view Prologis as nearly as compelling today. Prologis is a world-class REIT, but it is also much larger, more widely followed, and in our view, much closer to fair value.
We would not necessarily be buying Prologis today at current levels, so we do not want to indirectly own it through SEGRO just to capture the remaining merger spread.
At this point, SEGRO has become more of a merger arbitrage position.
That is not our game. We are not merger arbitrage investors. We are REIT investors. Our goal is to identify undervalued real estate companies before they are discovered by the broader market or acquired by larger players.
Once a deal is announced and most of the upside has been captured, we typically prefer to take the money off the table and look for the next opportunity.
