Baron Capital, an investment management company, released its Q4 2025 letter for its “Baron Real Estate Income Fund”. A copy of the letter can be downloaded here. In 2025, the Fund appreciated 3.74% (Institutional Shares), exceeding the 1.68% gain for the MSCI US REIT Index (the REIT Index). In Q4 2025, the Fund declined modestly by 0.40%, outperforming the Index’s 1.99% decline. In contrast to the substantial double-digit growth delivered in 2023 and 2024, the Fund’s modest performance in 2025 can be attributed to a variety of factors, such as stronger relative growth in several sectors outside of real estate, ongoing interest rate headwinds, and specific REIT subcategory headwinds. As of December 31, 2025, the Fund’s net assets are as follows: REITs (71.2%), non-REIT real estate companies (25.0%), and cash and cash equivalents (3.8%). Also, the Fund currently has investments in 13 REIT categories. Heading into 2026, the Firm is optimistic about the prospects for the stock market and the Baron Real Estate Income Fund. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Baron Real Estate Income Fund highlighted stocks like Weyerhaeuser Company (NYSE:WY). Weyerhaeuser Company (NYSE:WY) is one of the largest private owners of timberlands in the United States. On April 1, 2026, Weyerhaeuser Company (NYSE:WY) closed at $24.20 per share. One-month return of Weyerhaeuser Company (NYSE:WY) was -1.75%, and its shares lost 11.78% over the past 52 weeks. Weyerhaeuser Company (NYSE:WY) has a market capitalization of $17.45 billion.
Baron Real Estate Income Fund stated the following regarding Weyerhaeuser Company (NYSE:WY) in its fourth quarter 2025 investor letter:
“During the quarter, the Fund acquired shares in Weyerhaeuser Company (NYSE:WY), one of the world’s largest owners of timberlands with approximately 10 million acres in the U.S. and an additional 13 million acres that are licensed in Canada. It is also one of the largest manufacturers of wood products such as lumber, OSB, plywood, and other building materials that are used in new housing construction and repair and remodel projects. The company is currently trading at an approximate 40% discount to net asset value, which is well above its mid-teens historical average and near all-time peak levels. We believe that the shares of Weyerhaeuser have become irrationally cheap and that support from recent lumber capacity curtailments, upward pricing momentum for lumber (from now-implemented Canadian duties and tariffs) and government housing initiatives should help bring the valuation back towards historical levels over time. Additionally, further support from an eventual pickup in new housing construction and repair and remodel activity could drive share price gains over the medium-to-long term.”
