Renaissance Property Securities is a boutique fund manager established in 2003, specialising in the management of portfolios of property securities listed on the Australian Securities Exchange.
It provides a diversified exposure to ASX listed property securities through its specialised funds. These provide exposure to domestic and global property assets, across office, retail, industrial, residential, and other specialist sectors.
Renaissance believes each security has an underlying or intrinsic value and that securities become mispriced relative to this value and relative to each other. Such mispricing is the result of irrational market behaviour including, amongst other factors, over optimistic or over pessimistic sentiment towards certain types of securities or sub-sectors of the property market.
Renaissance Property Securities seeks to exploit such market inefficiencies by employing an active, value-based investment style. Our belief is that ultimately the value of a stock will, in the long term, be determined by its income fundamentals. As a result, our approach is characterised by bottom-up investment research into individual securities, with a particular focus on analysing and forecasting the present and potential future income generation of each underlying property investment.
We believe environmental, social and governance (ESG) factors are among those potentially mispriced by the market, and that as a consequence, attention to these offers opportunity for value investing. We consider these issues alongside financial measures in order to develop a more complete view of the risk/return characteristics of property investments. We consider it our fiduciary duty to consider ESG factors in order to receive the best risk-adjusted return for our clients. For example, the physical and transitional risks posed by climate change pose a financial risk to property investments.
The ESG issues most relevant to property securities depend on the asset type, location, life cycle phase, corporate structure and other individual company characteristics. For example, shareholder alignment in fee arrangements may be important for externally managed trust structures; whereas local communities may be more material for property securities focused on development and construction.
Our research team has developed a proprietary ESG framework to assist in rapidly highlighting material ESG issues for each security, and examining available evidence in greater detail as part of our bottom up analysis process. This allows us to integrate our assessment of ESG factors into our qualitative risk metrics.
Renaissance is committed to remaining at the forefront of developments in responsible investment, and emerging ESG themes. We will review The Renaissance Property Securities ESG Framework periodically to ensure it continues to reflect the latest thinking on ESG issues relevant to the property sector.
Renaissance Property Securities’ investment decision-making is supported by the following:
At Renaissance, we strongly believe that it is in the long term interest of shareholders for companies to adopt a strong and robust corporate governance framework and that this can be an important driver of investment value. Where we have the ability to influence companies to improve their management of environmental, social and governance (ESG) issues, we actively encourage these high standards for companies and trusts within our investment universe.
As investors, we engage companies regularly, via meetings with company representatives, or at on-site property inspections. The two-way dialogue afforded by these opportunities enables us to canvas a wide range of topics – including on ESG issues. The approach to engagement encompasses meetings which occur at regular intervals (typically annually) to discuss ESG issues generally with a particular investee company, as well as meetings which occur as a result of Renaissance’s Portfolio Managers identifying specific ESG issues for engagement with a particular investee company. Renaissance’s portfolio managers also determine the appropriate escalation strategies to be employed when engagement with investee companies does not lead to desired outcomes.
The exercising of voting rights is another means by which we influence companies to operate in the interest of investors. We give careful consideration to all resolutions offered for vote by companies, including advisory resolutions and those put forward by shareholders. We see it as our responsibility to communicate any major concerns to companies ahead of AGMs, so that they have the opportunity to respond. We report to clients on how we vote, on request.
When exercising our voting rights we will always cast votes in the best interests of our clients.
We recognise that all investors have a role in supporting improved ESG performance across the market and support a number of broader responsible investment initiatives, focusing particularly on three topics we regard as most relevant for the constituents of our portfolio.
From an engagement and voting perspective, we have a specific focus on the following ESG factors:
Renaissance Property Securities is committed to ongoing improvement in ESG analysis, and will update this policy periodically.
Responsibility for oversight and implementation of this policy rests with the principals of Renaissance Property Securities. This ensures close integration of ESG insights within the investment process, and enables experience gained through this process to shape future updates