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ear Fellow Shareholders,

    We are pleased to provide you with the Third Avenue International Real Estate Value Fund's (the "Fund") report for the quarter ended September 30, 2024. During this period, the Fund generated a return of +11.75% (after fees) compared to the FTSE/EPRA NAREIT Global ex U.S. Index (the "Index"), which returned +16.74%. Over the past year, the Fund generated a return of +22.17% (after fees) versus +23.29% for the Index.

    A broad recovery in public international real estate resulted from easing monetary conditions and interest rate cuts. China's announcement of monetary easing and fiscal stimulus boosted Asian equities towards the end of the quarter. While share prices rallied, the index still needs to increase by over 30% to return to pre-COVID valuations.

    The Fund trailed the benchmark due to currency fluctuations, particularly the appreciation of the Japanese yen, which reduced exposure in the Fund. Political uncertainty surrounding Mexican and U.S. elections also impacted returns from the Fund's Mexican nearshoring-exposed industrial real estate investments. Additionally, a lack of resource conversion events hindered the Fund's performance.

    Fund Management remains comfortable with its allocation to Real Estate Operating Companies that retain cash flow, reinvest in their businesses, and recycle capital. The Fund has a smaller allocation to these companies due to their low yields, lack of growth prospects, and external management structures.

    The Fund initiated an investment position in Spanish diversified REIT Merlin Properties during the quarter. Merlin owns a portfolio of office, retail, and logistics assets across Spain and Portugal, with a combined value of US$13 billion. The company has impressed Fund Management with its strategic ability to scale its asset base through acquisitions, remain focused on its geographic region of expertise, build a preeminent Spanish logistics portfolio, and add value by redeveloping office and retail assets.

    Merlin's data center development plans are de-risked due to equity funding in place, owned land, secured power, and building permits. The current share price reflects none of this upside potential, making it a compelling entry point for value investors. Merlin complements the Fund's investment in Hong Kong data center operator Sunevision Holdings Ltd.

    The Fund also initiated an investment position in Genting Singapore, the owner and operator of Resort World Sentosa, an integrated resort opened in 2010. The casino is one of only two currently allowed in Singapore, with exclusive rights until at least 2030. Genting's balance sheet has no debt and significant cash, ample land for expansion, and a strong tourism outlook.

    The Fund's Asian exposure now represents 33% of its assets, with a diverse geographic exposure. The majority (69%) of the Fund's exposure is in industrial/logistics, residential, and self-storage real estate asset types. Following the Genting investment, the Fund's lodging/resorts exposure is now 7% of Fund assets.

    The attractive valuation discounts apparent in investments such as Sunevision and Genting are common across listed real estate in Asia. Markets seem to imply significant discounts to underlying real estate value and do not factor in upside potential from accretive developments or improving fundamentals. This phenomenon is also observed in Western markets, particularly in self-storage, where the Fund has a 20% exposure.

    Self-storage real estate is relatively immature outside the U.S., with less supply and difficulty delivering new supply in many international cities. The demand picture benefits from consumer awareness improvements, urbanization, and declining home sizes making storage more desirable. The Fund's self-storage investments trade at an average of 15%-20% discounts to Fund Management's conservative estimates of real estate value.

    Conservatively, if international self-storage were to be leased up to 90%, the Fund's investments should benefit from significant earnings upside given the fixed-cost nature of the facilities. Additionally, the Fund's self-storage investments have large and accretive development pipelines, with an estimated 30% to 40% upside to earnings.

    We believe that any uptick in housing market activity will positively impact self-storage occupancy and income levels, acting as a catalyst for the Fund's self-storage investments. We thank you for your continued support and look forward to writing to you again next quarter.

    Sincerely,

    Quentin Velleley, CFA Portfolio Manager