The Property and Infrastructure Fund returned -2.7% in July, below the benchmark index, which returned -1.1%.

Groupe ADP (+5%) reached agreement with the French State on an eight-year economic regulation agreement covering 2027 to 2034, the framework which sets the prices it may charge airlines at its Paris airports. The proposal fixes an allowed return of 5.8%, and average tariff increases of a little over two percentage points above inflation, with materially higher increases in the first two years. It also includes €8.2 billion of investment and meaningful cost savings by 2034. Regulated returns have been a persistent source of disappointment for Groupe ADP, and the regulator rejected the company’s 2026/27 pricing proposal in December, with unfavourable implications for the longer-term plan. The agreement also resolves much of what the regulator had left unclear in a non-binding opinion in April. Airline consultation and a binding opinion from the regulator remain outstanding, although the State’s backing materially improves the prospects of a favourable one. The market values the Paris business at a substantial discount to the value of its assets, and a credible path to earning an adequate return on them is the single most important driver of that discount closing.

Groupe ADP also reported first half earnings which beat market expectations. However, full-year guidance was trimmed, albeit the bottom of the new range sits above prior market expectations. We made no change to our position. We expected regulation to be more favourable, but ultimately it is the company’s agreement with the regulator, not the State, that will lock in the next regulatory framework.

Port of Tauranga (-9%) was the worst performer in the NZX50 during July, giving back a strong June in which the shares rose 10%. Recent data from Stats NZ showed Port of Tauranga total tonnage (which represents ~85% of company-reported tonnage) for the five months to May 2026 is down 12% on the prior year, with both imports and exports lower. While container volumes appeared stable in recent months, log exports have declined as a result of reduced harvest activity (in part due to elevated fuel prices). Container volumes, by contrast, remained broadly stable, and the pricing schedule published for the current financial year — a 4% lift in bulk charges, a higher infrastructure levy and a 25% increase in vehicle booking fees — keeps the pricing-led earnings story firmly intact. The port remains at berth capacity, and a decision on the Stella Passage berth extension is due in September; approval would in time allow container volumes to double. We made no change to our position, regarding July’s pullback as sentiment-driven rather than any deterioration in fundamentals.