Baron Capital, an investment management company, released its Q2 2026 letter for the "Baron Real Estate Income Fund." The Fund gained 12.18% (Institutional Shares) during the quarter, modestly outperforming the MSCI US REIT Index, which increased 11.84%. The letter can be downloaded here. Its long-term performance also remains strong, with Morningstar ranking it the #2 real estate fund since its December 2017 inception.
The letter discusses management's current views, portfolio composition, key contributors and detractors, recent activity, and the outlook for real estate and the Fund. Management believes a multi-year recovery in real estate is beginning to emerge, despite elevated interest rates, housing affordability pressures, and AI-related disruption. Its constructive outlook is supported by attractive valuations, accelerating M&A, favorable supply-demand dynamics, healthy balance sheets, improving debt conditions, and increasing recognition of real estate as an AI beneficiary.
The Fund remains positioned to benefit from improving growth, rising dividends, and potential valuation normalization. Please review the Fund's top five holdings to gain insights into their key selections for 2026. In its second-quarter 2026 investor letter, Baron Real Estate Fund highlighted Prologis, Inc. (NYSE:PLD).
Prologis, Inc. (NYSE:PLD) is a leader in logistics real estate focuses on high-barrier, high-growth markets. On September 21, 2026, Prologis, Inc. (NYSE:PLD) closed at $133.74 per share. Over the past month, Prologis, Inc. (NYSE:PLD) declined 5.24% and its shares gained 18.68% over the past 52 weeks.
Prologis, Inc. (NYSE:PLD) has a market capitalization of $131.65 billion with a 52-week trading range between $111.03 and $153.35. Baron Real Estate Fund stated the following regarding Prologis, Inc. (NYSE:PLD) in its Q2 2026 investor letter: "We remain constructive on the Fund's industrial REIT holdings, Prologis, Inc. (NYSE:PLD), driven by a favorable multiyear outlook for demand, supply, and rent growth. We see significant embedded growth potential from in-place rents that generally sit approximately 20% below market levels, as well as secular tailwinds including e-commerce expansion, supply chain logistics, "just-in-time" inventory strategies, and nearshoring/onshoring trends." Prologis, Inc. (NYSE:PLD) is not on our list of the 40 Most Popular Stocks Among Hedge Funds.
As per our database, 64 hedge fund portfolios held Prologis, Inc. (NYSE:PLD) at the end of the second quarter which was 58 in the previous quarter. While we acknowledge the potential of Prologis, Inc. (NYSE:PLD) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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