He said it
“I think target date funds run by plan sponsors is the most likely vehicle for accessing 401(k) money. And then I think, within sectors, real estate is probably the easiest place to start.”
Institutional investors are buying into a V-shaped recovery for Europe’s hospitality sector. Some of Europe’s biggest insurers helped propel London-based Schroders’ debut hotel fund to €425 million last week. The pan-European vehicle now has 85 percent of its target capital after just six months of fundraising. Similarly, Madrid-based manager Azora held a €680 million first close for its own debut hotel fund, beating its initial target of €600 million. Pension fund investors, sovereign wealth funds and other institutions signed onto the strategy targeting European “sun and beach” destinations.
Azora founding partner Concha Osácar (pictured) says investors are confident in European hospitality and share her view that covid-19 is a short-term disruption. Azora has made 10 investments in seaside cities from the fund thus far, a flurry of activity compared with the US, where travel and investment remain hampered the pandemic.
Managers beware: South Korea has pledged to keep institutional investment on a short leash. IGIS Asset Management learned this the hard way when regulators pressured it into dropping a 40 billion won ($33.5 million; €28.5 million) investment in a Seoul apartment building. The government claimed the manager’s plan to invest another 40 billion won into improving the 11-story property violated a rule banning profits from leasing and resales. South Korea has implemented protectionist measures to curb speculation from foreign buyers, but this stance might well catch those managers simply deploying traditional value-adding tactics. See more coverage here.
Less is moratorium
As Congress grapples over the next pandemic stimulus package, there is one relief measure institutional managers would like unrenewed: the moratorium on evictions. The pause applies to properties financed by government-backed loans, which accounts for much of the US multifamily market. One significant participant in this space tells us the moratorium has done more harm than good by impairing his tenants’ long-term credit positions and hurting his firm’s abilities to maintain affordability.
What part of the stimulus debate is most important to your business? Drop a note to Kyle Campbell at email@example.com.
Leading the pack
Last year, professionally-managed real estate grew to more than $9 trillion globally. The US alone accounted for $3.4 trillion of that.
The development-minded see a path to profitability in the over-saturated, underperforming US retail market: repurposing. Since 2017, 59 retail-to-industrial conversions have been completed, started or proposed in the country, according to a report from CBRE, up from 24 as of January 2019. In total, firms want to turn 13.8 million square feet of retail into 15.5 million square feet of logistics. So-called ‘dead malls’ in the Midwest are prime candidates for such conversions. Proximity to highways and consumer markets make these abandoned properties ideal for distribution. Seems the market saw our coverage on the topic a year ago.
Other retail owners are pivoting in a different direction. Hudson Yard owners Related and Oxford Properties want to fill a three-story, 188,000-square-foot retail vacancy in the Manhattan complex with office tenants. Similarly, Los Angeles’ Westside Pavilion is being turned into creative office.
Renowned German property executive Michael Bütter (his LinkedIn profile here) has been appointed chief executive of Frankfurt-based Union Investment’s real estate platform where he will oversee the bank’s €43.5 billion commercial property portfolio. Bütter was previously CEO of the German manager Corestate Capital, which he departed at the end of 2018. His résumé also includes stints at German real estate companies such as Vonovia, Scout24, ImmobilienScout and TLG Immobilien.
Making the switch
Another long-time real estate executive also changed teams. Carmel Hourigan (her LinkedIn profile here), the one-time head of global real estate at Sydney-based AMP Capital, now holds the role of office chief executive at fellow Australian manager, Charter Hall. She replaces departing CEO Adrian Taylor.
This week’s LP meetings
Tuesday, July 28
- Massachusetts Pension Reserves Investment Management Board
- City of Fresno Retirement Systems
- Los Angeles City Employees’ Retirement System
Wednesday, July 29
- Pennsylvania State Employees’ Retirement System
- New York State Teachers’ Retirement System
- Orange County Employees Retirement System
- Arizona Public Safety Personnel Retirement System
Thursday, July 30
Friday, July 31