The “gating” of UK property funds offers potential investment opportunities, according to Partners Group co-head of private real estate Claude Angéloz.
To date, seven UK property funds, with around £18bn (€21bn) in assets, have halted redemptions, and UK institutional investors have been seeking reassurance they will be unaffected by the suspensions.
Angéloz told IPE Real Estate that fund gating was a sign people were nervous of the unknown.
“Maybe [the fund managers] were proactive in trying to avoid people running to the gate,” he said.
He said the questions of who will be the UK’s next prime minister and how he or she might handle future negotiations with the European Union following a referendum vote to leave last month are for now unanswered.
“There will be people who will reconsider their exposure to the UK real estate market,” Angéloz said. “The supply-and-demand balance will change in the UK. If pricing in the UK does correct, then I could very well imagine we will buy into that market.”
This, he added, did not necessarily mean Partners Group, which globally has €8bn in commitments to real estate from its clients, would buy individual properties, but it will look for real estate secondaries.
Angéloz’s view comes as the UK experiences a slowdown in transactional activity and Brexit fallout, but sales by UK property funds could create opportunities for investors.
He said that was “exactly the situation” where Partners Group would consider buying portfolios of assets held in such closed-end funds.
When there is volatility, people make decisions that may not perfectly rational, he said.
“I don’t want to be arrogant and say we are perfectly rational,” he added, “but our global perspective and our institutional set-up ensures we can make deep-dive due diligence. Our investment decisions are based on maximum information and analysis.”
Angéloz recalled the bursting of the dotcom bubble, the global financial crisis, Europe’s debt crisis and the economic problems of the BRIC nations (Brazil, Russia, India and China).
In each of these, Partners Group found investment opportunities, he said.
In addition to Brexit, he added, the US election and pending elections in France and Germany were adding to global uncertainty.
“For us, as a global investor in real estate, not a lot has really changed in the last several years,” Angéloz said.
“We have capital, team resources and a global approach, and this places us in a perfect spot to capture opportunities as they arise.”
Angéloz said investment decisions were being made on the basis that interest rates might rise over the next 5-10 years and impact on cap rates.
Partners Group has investment capacity for the next 18 months.
He said the group would not stray from the retail, office, logistics and residential sectors.
