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 Prologis, Inc. (NYSE:PLD). Prologis, Inc. (NYSE:PLD) is a leader in logistics real estate focuses on high-barrier, high-growth markets. On April 1, Prologis, Inc. (NYSE:PLD) stock closed at $133.33 per share. One-month return of Prologis, Inc. (NYSE:PLD) was -2.00%, and its shares gained 30.56% over the past 52 weeks. Prologis, Inc. (NYSE:PLD) has a market capitalization of $126.84 billion.
Baron Real Estate Income Fund stated the following regarding Prologis, Inc. (NYSE:PLD) in its fourth quarter 2025 investor letter:
“Best-in-class industrial REIT Prologis, Inc. (NYSE:PLD) contributed positively to performance during the fourth quarter, aided by the company’s “beat and raise” third quarter financial report, coupled with management’s robust multi-year business outlook. As we outlined earlier this year in our first quarter shareholder letter, our sense had been that leasing activity had begun to stabilize and was poised to accelerate as the year progressed, which ultimately played out. We also outlined our view that Prologis is a competitively advantaged company with bright multi-year growth prospects, predicated on a favorable multi-year outlook for demand/supply/ rent growth, significant embedded growth potential from in place rents that are generally over 20% below market rents and 40% below replacement rents, several secular demand tailwinds (e-commerce, supply chain logistics, more inventory safety stock, nearshoring/onshoring), and a growing pipeline of lucrative data center development opportunities. We continue to believe the appreciation potential for Prologis’ shares remains compelling given the strong runway for future cash flow and earnings growth in the next several years and an undemanding valuation.”
Prologis, Inc. (NYSE:PLD) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 54 hedge fund portfolios held Prologis, Inc. (NYSE:PLD) at the end of the fourth quarter, compared to 59 in the previous quarter. While we acknowledge the risk and potential of Prologis, Inc. (NYSE:PLD) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Prologis, Inc. (NYSE:PLD) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Prologis, Inc. (NYSE:PLD) and shared the list of most profitable real estate stocks. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.
