Global investor M&G Real Estate is looking to acquire between €700m to €1bn of European real estate assets this year, broadly in line with investment levels for the past three years, as it seeks to increase its property holdings across Europe, according to Olivier Velloy, director, head of investments, Continental Europe.
The company is operating a two-pronged strategy, with a core balanced portfolio representing around 75% of its holdings by value and the remaining 25% in its long income fund, operated as an “internal joint venture” with the credit management team and focused on vehicles such as sale and leaseback and long-lease assets.
In the balanced fund around 55% of the properties are in the office sector, 35% in retail and 25% in logistics, with the latter the key focus for investment during 2019. Having established offices in a number of European markets over the past three years, Velloy said that the company was now well positioned to make informed decisions across local European markets and would also expand into residential, especially serviced assets such as senior and student living.
“In terms of investments, we are basing our investment decisions on a mix of location, asset types and the opportunities for rental growth and active asset management,” he said. “Our office strategy has largely been based on prime locations in gateway cities but we are also happy to look at edge-of-city opportunities, especially where we see improvements in the area or in the transport infrastructure.”
Velloy also remained bullish about retail, saying that although this sector would probably decrease as a total proportion of the investment portfolio because of the increase in logistics aacquisitions, it was not looking to actively divest.
“We are being very selective but are still investing in food-anchored schemes and high streets,” he said.
Warburg-HIH Invest
targets Vienna and Amsterdam offices
Hamburg-based real estate investor Warburg-HIH Invest has opened offices in
Amsterdam and Vienna as it focuses its attention on the office sector in both
cities, said Matthias Brodesser, head of international transaction management.
“Although prices and rents are at the top because we are late in the cycle, we believe Vienna is a defensive option as it is unlikely to experience instability,” he said. “After Berlin, we feel Amsterdam offers the most upward potential and may benefit if London is affected by Brexit. It is a very open-minded and commercial city, with a good work/life balance.”
Brodesser added that the new offices would enable the company “to have people on the ground, with local expertise, because there are no more vanilla deals”.
The company also continues to invest in high street and food-anchored neighbourhood retail centres, plus logistics assets.
IPSX at
MIPIM to spread word on first dedicated real estate exchange
The new regulated stock exchange, the International Property Securities
Exchange (IPSX), which launched in January, is exhibiting at the London Stand
at MIPIM, aiming to expand its trading base and to encourage private and
professional investors to use it as a real estate investment platform.
IPSX received Financial Conduct Authority (FCA) approval at the start of the year to become the first and only stock market dedicated to commercial real estate assets.
It is operating two markets: IPSX Prime as the core market on which commercial real estate owners can undertake initial public offerings of companies owning a single commercial real estate asset or, if approved, a multiple asset; and IPSX Wholesale, still under development, which will focus specifically on closely-held assets.
The rationale for a dedicated stock market – “the only one of the 250 stock exchanges worldwide to focus purely on real estate,” said IPSX chairman Anthony Gahan - is that real estate is still considered an alternative asset class despite its scale, performance and maturity. In addition, real estate has often been seen as restrictive for smaller investors, particularly retail investors. IPSX investors will be able to buy shares directly in companies holding single commercial real estate assets.
“We want to open up the world of real estate to everyone,” said Gahan. “Interest in real estate remains very high and the industry is also very international, so we want to encourage companies from all markets to participate.”
Careful development of IPSX, which Gahan said has taken four and a half years to bring to market, has attempted to identify “real estate pain points” and will “evolve as new products are created to exist on the exchange” as time goes on.
