European Heads Of Giant Canadian Investors Outline Their UK Investment Plans
How big global institutional investors view the UK after Brexit has been one of the key existential questions for the real estate sector in this moment of political turmoil. At this month’s Bisnow London State of the Market event, the European head honchos of two of the world’s largest real estate investors told more than 300 delegates about their UK investment strategies, including forays into some interesting new sectors.
Ivanhoé Cambridge Head of Europe Karim Habra
Karim Habra joined Ivanhoé Cambridge from LaSalle Investment Management in April 2018. The Montreal-based investor is the real estate division of Caisse de dépôt et placement du Québec, and owns about £38B of real estate worldwide. Here is Habra’s view on the UK.
On London Offices
“On the asset management side, in the occupier market we had a good year. We saw some occupancy in our buildings going up from 50% to 90%. We think there is fundamentally not enough good space, so that occupier market is well positioned. But we haven’t invested in new office buildings in London as this is where we are a bit cautious.”
“We have done a lot in logistics. In March this year we acquired four sites in the north of England, 130 acres, a total project cost of £300M and we did it a few weeks before the Brexit deadline, so for us logistics is actually a defensive play against Brexit. So we are continuing to increase our exposure. We are just about to reach £500M in assets, and we only do development. We thought that market was too expensive to buy assets, so we set up a platform with Peel, PLP Logistics, where we have 20 people running around looking for sites. We are taking planning risk, lease-up risk, development risk; it is an opportunistic play, but we think that is the best way to access that sector.”
On Finding Value
“We did different deals, but we did invest in easyHotel [where Ivanhoé took private the listed hotel company with 39 hotels for £140M]. This is an opco/propco [operating company/property company], private-equity style deal, but we actually need to find these kind of deals to create value for our shareholders. So that is an interesting deal where we actually buy not just the real estate but the brand, the people, the pipeline, the whole value-creation chain.”
On Its Future UK Ambitions
“We had to be a bit more innovative and creative to invest in the market, but for us London is a very important market; it is as important as Paris or Germany. This year we have hired a head of asset management and a head of investment for the UK, as it is a long-term market for us.”
Oxford Properties Head of Europe Joanne McNamara
Joanne McNamara stepped up from head of investment to overall head of Europe at Oxford Properties earlier this year. The Toronto-based real estate arm of pension fund OMERS has about £34B of assets across the world. Here’s its UK strategy.
On The View From Canada
“In the UK we were probably more nervous a year ago, and we have probably been surprised to the upside. That being said, everyone in Toronto thinks the election means we’re going to resolve Brexit. When you live closer to it you realise that’s not the case, and so we’re not over all the pain yet. But that being said, we still believe the UK is a place we want to invest.”
On UK Build-To-Rent
“We recently invested in the Get Living platform. We are focused on having a strong London presence but we also have sites in Leeds, Manchester and Glasgow, and you can make it work because there is a shortage of supply across the UK. That kind of income is very granular, very diverse, there is huge pent-up demand, people can no longer afford to buy their own homes, they are prepared to rent, so we are 100% convinced in that as a strategy going forward.”
On Pushing Into New Sectors
“One of the benefits of working for a global business is you get to see things that will come here from other parts of the world, especially the U.S. We have been a credit investor in life sciences and data centres in the U.S. for some time, and we like to do that to learn and understand the operations side of things. And I think, alongside our infrastructure team you will see a lot more investment in companies and assets in those sectors.
The fundamental themes coming from it are the huge increase in data being created; and in life sciences, as we age the requirement for medical labs and lab space, especially in locations where you have research and education, increases. So we’ve been a key lender in Cambridge, Massachusetts, and you will see that coming through here. You have to hope that whatever happens with Brexit, the government will put some serious investment into these sectors, as we have to keep the expertise here so we can start developing things and making that an important part of our real estate world.”
On London Offices
“We have been investing in residential and also in logistics in the UK. We haven’t been investing as much in London offices for some time. That is not through us not believing in it: We have been surprised to the upside in terms of the occupational market. We probably thought there would be more of a reaction to Brexit from occupiers, so we have been a bit more cautious on that side, but we are not cautious on the UK, we have just been diversifying.”