Global Real Estate Securities Fund

Capital at risk. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

The listed funds are not an exhaustive list of funds available. Visit www.funds.troweprice.com to see the full range of funds offered by T. Rowe Price, including those that consider environmental and social characteristics as part of their investment process. For up to date information regarding any T. Rowe Price fund's investment strategy, please see the relevant fund KID and prospectus.

Overview

Manager's Outlook

With the prospect of higher interest rates and fuel prices leading to a consumer slowdown, we have tilted the portfolio toward sectors where rents can grow at or above the pace of inflation as a result of favorable demand and supply dynamics. These segments include apartments, industrial warehouses, and self-storage. We are also selectively maintaining our overweight position in hotels given that a pickup in business travel from a low base can offset any potential weakness in leisure travel going forward. Hotels in Japan and China should also benefit from an eventual reopening of borders, and we have exposure to hotel companies in both these markets. ��

�

We are cautiously optimistic for global real estate returns in the second half of 2022, especially after the year-to-date correction. Valuations on cash flow metrics are now generally in line with long-term averages, with the prospects of healthy earnings growth in sub-sectors with pricing power. Coastal apartment REITs in North America continue to benefit from a return to work and low supply in several key cities. We also have a significant bet in single family residential REITs where a tight housing market and a stickier customer base should underpin solid rental growth. Industrial warehouses is one of our biggest sub-sector overweights; several cities, such as Shanghai, Sydney, Los Angeles, and Hong Kong, have a scarcity of city center industrial land, leading to above-average rental growth. Additionally, consumer preferences for same-day or next-day delivery has led to high demand for prime locations.

�

Self-storage is another sector we are positive on given relatively resilient demand driven by customers' life events, and the length of rentals continues to increase with supply building slower than expected. Self-storage landlords can also reset rents ahead of inflation since rates are adjusted on a weekly or monthly basis. While work from home will continue to be an obstacle for office demand, we selectively own Grade A office landlords in supply-constrained cities such as Hong Kong and London. In cities such as London we are already seeing a green premium for Grade A environmentally-friendly office buildings versus Grade B assets.

�

We believe investing in the global real estate market offers inflation-protection potential, especially given our focus on sub-sectors that have pricing power driven by improving demand or falling supply. �We remain constructive on the earnings potential for several property types in the second half of 2022 and 2023 driven by rising rents and falling supply. Additionally, we expect to see a continued divergence in performance between high-quality Grade A real estate versus Grade B assets. We believe our well-located real estate holdings are positioned to benefit from these trends. �

Strategy

Fund Summary

We seek to make well-timed investments in undervalued real estate companies, favouring high quality real estate in land-constrained markets. We aim to identify real estate with a high asset base potential to build a well-diversified portfolio. The promotion of environmental and/or social characteristics is achieved through the fund's commitment to maintain at least 10% of the value of its portfolio invested in Sustainable Investments, as defined by the SFDR. Additionally, we apply a proprietary responsible screen (exclusion list). The manager is not constrained by the fund’s benchmark, which is used for performance comparison purposes only.

Asia Pacific Excluding Japan

01 April 2021

Effective 1 April 2021, Jai Kapadia assumed sole portfolio management responsibility for the Global Real Estate Securities Fund.

30-Jun-2022 - Jai Kapadia, Portfolio Manager ,

During the quarter, we remained focused on companies with quality properties, strong management teams, and solid balance sheets. We have overweight positions in market segments that we expect to benefit from their pricing power, such as lodging, apartments, industrial, and self-storage REITs. We took advantage of the downturn in industrial names following Amazon's announcement that it will slow its pace of leasing warehouse space and added to our positions in the sector. We believe that there is more than enough demand available from other sources to absorb any excess capacity created by Amazon's pullback. Additionally, there is a scarcity of city center industrial land, which is necessary for same-day delivery.

United States

The largest absolute weight in the portfolio and benchmark is in the United States, the largest and most mature market within commercial real estate.

Prologis, an industrial property landlord with significant global scale, remained the portfolio's largest holding, and we added to our position to take advantage of more attractive valuations during the period. We believe that the company is well positioned to benefit from supply chain reconfiguration and growth in e-commerce, and its focus on faster-growing markets could drive above-average rental growth.
We initiated a position in American Homes 4 Rent, which is focused on single family home rentals. We believe a lack of housing supply should drive continued strength in single family rental rates, and we like the sector's relatively defensive characteristics.
We eliminated our positions in student housing provider American Campus Communities and industrial REIT PS Business Parks, both of which agreed to takeover offers from affiliates of Blackstone Group.

Japan

We have a significant weighting in Japan. We believe Japanese real estate stocks should benefit from a lifting of coronavirus-related restrictions as well as the Bank of Japan's commitment to a very accommodative monetary policy.

We added to Mitsui Fudosan, our largest position in Japan. The company, which develops and owns numerous office, housing, and retail properties, has made progress in improving shareholder returns via dividends, share buybacks, and the removal of cross-holding shares.
We initiated a position in Katitas, a company focused on renovating and reselling detached housing. We believe the company can gain market share in a fragmented used-home market, with limited competitive pressures. ��

�

United Kingdom��

We have a large allocation to the United Kingdom. In our view, London remains an attractive global city for companies, employees, and real estate investors alike.

We added to our position in Intercontinental Hotels, one of the world's largest hotel operators, amid attractive valuations. We believe the company should benefit from an accelerated pace of new unit growth, and we like InterContinental's asset-light model, which should provide some protection against wage inflation.
Derwent London and Great Portland Estates represent our largest positions in the UK. We have a positive view on Grade A office landlords given green buildings are in high demand.

�

Continental Europe

We adjusted our positioning in Europe.

In Belgium, we took advantage of the recent downturn in industrial REITs and initiated a position in Warehouses de Pauw, which owns industrial warehouses across Europe. The company's leases are linked to inflation, and the limited availability of supply in its markets should be beneficial.
We reduced our position in Vonovia, a company that owns a large portfolio of multifamily residential properties in Germany. In our view, high interest rates and rent controls would make it difficult for Vonovia to grow earnings above inflation.

Team

Jai Kapadia,
Portfolio Manager

Jai Kapadia is a regional portfolio manager in the International Equity Division. He manages the Global Real Estate Equity Strategy and is responsible for stock selection for the Asia-Pacific region. Jai’s investment experience began in 2004, and he has been with T. Rowe Price since 2011, beginning as an analyst and associate director of research in the Equity Research Group in Hong Kong, where he covered Asian conglomerates, real estate, and Indian pharmaceuticals. Prior to joining the firm, Jai was employed by Credit Suisse, covering telecommunication equipment stocks, and by Sirios Capital, covering consumer stocks.

Portfolio Manager since

2021

Years at T. Rowe Price

Years investment experience

Brian Dausch,
Portfolio Specialist

Brian Dausch is a portfolio specialist in the U.S. Equity Division working closely with institutional clients, consultants, and prospects.

Years at
T. Rowe Price

Years investment experience

Indicative Benchmark Data Source: FTSE Russell. London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2021. FTSE Russell is a trading name of certain of the LSE Group companies. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

Past performance is not a reliable indicator of future performance.

Source for performance: T. Rowe Price. Fund performance is calculated using the official NAV with dividends reinvested, if any. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested. It will be affected by changes in the exchange rate between the base currency of the fund and the subscription currency, if different. Sales charges (up to a maximum of 5% for the A Class), taxes and other locally applied costs have not been deducted and if applicable, they will reduce the performance figures.

Daily performance data is based on the latest available NAV.

The Funds are sub-funds of the T. Rowe Price Funds SICAV, a Luxembourg investment company with variable capital which is registered with Commission de Surveillance du Secteur Financier and which qualifies as an undertaking for collective investment in transferable securities (“UCITS”). Full details of the objectives, investment policies and risks are located in the prospectus which is available with the key investor information documents and/or key information document (KID) in English and in an official language of the jurisdictions in which the Funds are registered for public sale, together with the articles of incorporation and the annual and semi-annual reports (together “Fund Documents”). Any decision to invest should be made on the basis of the Fund Documents which are available free of charge from the local representative, local information/paying agent or from authorised distributors. They can also be found along with a summary of investor rights in English at www.troweprice.com. The Management Company reserves the right to terminate marketing arrangements.

Please note that the Fund typically has a risk of high volatility.

Hedged share classes (denoted by 'h') utilise investment techniques to mitigate currency risk between the underlying investment currency(ies) of the fund and the currency of the hedged share class. The costs of doing so will be borne by the share class and there is no guarantee that such hedging will be effective.

The specific securities identified and described in this website do not represent all of the securities purchased, sold, or recommended for the sub-fund and no assumptions should be made that the securities identified and discussed were or will be profitable.

Attribution Data: Analysis represents the total performance of the portfolio as calculated by the FactSet attribution model and is inclusive of other assets that that will not receive a classification assignment in the detailed structure shown. Returns will not match official T. Rowe Price performance because FactSet uses different exchange rate sources and does not capture intra-day trading. Performance for each security is obtained in the local currency and, if necessary, is converted to U.S. dollars using an exchange rate determined by an independent third party. Figures are shown with gross dividends reinvested.

Sources: Copyright © 2020 FactSet Research Systems Inc. All rights reserved. Analysis by T. Rowe Price Associates, Inc. T. Rowe Price uses a custom structure for sector and industry reporting for this product.

A full list of the currently issued Share Classes including Distributing, Hedged, and Accumulating Categories may be obtained, free of charge and upon request, from the registered office of the Company.

The Morningstar rating is sourced from Morningstar.

©2022 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Citywire Data Source: Citywire – where the fund manager is rated by Citywire, the rating is based on the manager’s 3-year risk adjusted performance. For further information on ratings methodology, please visit www.aboutcitywire.com.

United States

Japan

Risks

Typical Investor

Commentary for