Nuveen completed its acquisition of Schroders at the start of October. It is the largest example of a $14bn (€12.5bn) in M&A activity by US asset managers taking over European firms this year – the highest level since records began in 1995, according to data from Dealogic. Schroders is a long-established name in the City of London, founded in 1804, while Nuveen, which is owned by US insurance and retirement savings firm TIAA, dates back to 1898. So the merger is both historic and a sign of the times.
But in the world of real assets specifically, the merger has implications. Invariably, when it comes to large asset manager consolidation, the respective real estate and infrastructure arms are not front and centre in the decision making. But the ramifications for these business could be significant – for existing staff and strategies, and for their investors.
As IPE Real Assets reported earlier this year, the tie-up could create the world’s fifth largest real estate investment manager and 11th largest infrastructure fund manager, based on last year’s IPE Real Assets rankings. According to this year’s Top 100 infrastructure investment managers ranking, Nuveen and Schroders combined would manage around €53.8bn in infrastructure assets, taking them to just below 10th-placed Allianz Global Investors. According to last year’s Top 150 real estate investment managers ranking, the combined entity would manage about €148bn in real estate, taking it above PGIM Real Estate.
For the next 12 to 18 months, Nuveen and Schroders will “maintain their existing investment teams” during the integration process, according to the announcement. So when IPE Real Assets publishes this year’s Top 150 real estate investment managers report in November the two firms will still appear separately.
There has been other recent M&A activity that has had been specifically about real estate. DWS recently announced a takeover of Peakside Capital Advisors, which specalises in value-add and opportunistic investments in Germany and Eastern Europe. DWS has a global real estate investment management arm – which last year came 26th in the Top 150 ranking with €64.3bn in assets.
Stefan Hoops, CEO of DWS, said: “The acquisition of Peakside is an important step in strengthening our alternatives platform. Peakside will add established capabilities and a strong track record in value-add and opportunistic real estate investing in Europe. It sends a clear signal that real estate is a core part of our alternatives offering and an exciting asset class that we want to grow.”
This clear intention to expand capabilities within real estate comes is notable, coming at a time when real estate is facing competition for capital – particularly from infrastructure, which is currently riding the growth of AI, data centres and energy transition.
Meanwhile, Hines, which historically has been a pure real estate investor, starting life as a Houston-based developer before evolving into a global real estate investment management firm, emphasised its plans to become a broader real assets player when it recently announced major changes in its leadership.
Adam Hines, the grandson of the late Hines founder Gerald Hines, is to join his sibling Laura Hines-Pierce as co-CEO of the firm. Jeff Hines, the son of Gerald Hines, is to move from co-CEO to chairman as part of ongoing leadership transition plans. He will step back from day-to-day management and focus primarily on advising the Co-CEOs. Meanwhile, David Steinbach will become the firm’s first president and Alfonso Munk, currently co-head of investment management, will replace Steinbach as the new global CIO.
This summer, Steinbach and Michael Hudgins, senior managing director for research at Hines, produced a report entitled, Better together: where infrastructure and real estate converge, revealing the strategic thinking the firm is taking. “Infrastructure and real estate increasingly overlap across the built environment,” the report said. “That convergence has potential implications for investors because the two sectors share common real-asset DNA but often deliver resilience, inflation sensitivity, income, and cyclical upside in different proportions.”
When announcing the leadership changes, Hines said the appointments built on the “strong momentum Hines has generated since adopting its real assets strategy”. In a statement, Laura Hines-Pierce and Adam Hines said: “Capital, infrastructure and human activity are converging in new ways across the built world, expanding the opportunity set beyond traditional definitions of real estate. Our ambition is to apply nearly 70 years of local knowledge, operating experience and investment discipline to that broader opportunity and connect those strengths across one global platform.”
The interaction between real estate and infrastructure – and private markets more broadly – is going to be a space to watch in the coming years. This year’s annual Expo Real trade fair in Munich also reflected the times by launching its InfrastructureNow platform.
Mahdi Mokrane, co-head of fund management at Patrizia, told IPE Real Assets at Expo Real that his company has established a unified investment committee across both asset classes. “I look into the infrastructure deals. My counterpart in infrastructure looks at real estate transactions, buying and selling,” said Mokrane. “Silos are not always ideal if you can break them in a way that doesn’t hurt productivity and even improves it.”
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