Change of the guard

GIC has been in the news twice recently underlining its largesse in European real estate investment circles. In early May, the Singaporean sovereign wealth fund became a major shareholder in Alstria Office REIT by acquiring a 12.7% stake in the German landlord.

That came hot on the heels of INREV announcing that GIC senior vice-president Neil Harris had become its new chairman.

Taken together, these are both interesting and noteworthy developments. GIC has been conducting real estate transactions directly for many years now. At the same time, INREV continues to appoint figurehead chairmen from such organisations. INREV ostensibly came into being to champion the interests of investors in non-listed real estate. In many people’s minds that meant, for the benefit of investors in real estate funds. Yet, on the last two occasions, INREV has selected large, powerful investors that nowadays are far less active as fund investors as they do so much directly, which has opened up INREV to potential criticism centred on why the likes of APG and now GIC should hold such representative positions at the association.

However, this column is not about bashing INREV. Instead, it is about what is happening behind the scenes at GIC in Europe because, for me, the most interesting news coming out of the sovereign fund is that there is to be a change of guard this month.

At press time this had not been made public, but come the end of May, head of Europe Chris Morrish is retiring from the business. According to a short letter sent in April to various friends and firms that GIC has partnered during his tenure, the longstanding Morrish said he was retiring at the end of May to pursue personal interests. Although he will stay on as a consultant to GIC, his participation will be limited to part-time contact. Morrish has been with GIC for a long time now. He joined in 2000, having previously served as strategic planning officer at major UK REIT Hammerson. And, over the past 16 years at GIC, he has earned a reputation for being a quiet, thoughtful investor. He is also said to have been one of Seek Ngee Huat’s men – Seek retired as global president of GIC in 2011.

It may be co-incidence, but news of Morrish’s retirement comes as GIC announces a raft of changes at the top of its investment group, including the appointment of five global CIOs to oversee each main asset class. Group CIO Lim Chow Kiat will be deputy group president from 1 June in addition to his current position. Lee Kok Sun becomes head of real estate as one of five asset class CIOs.

In an intriguing statement, GIC’s group president, Lim Siong Guan, said changes were being made to ‘enhance investment capability’. He added: ‘The appointment of CIOs reflects the maturing of GIC’s investment talent, and strengthening of GIC’s capacity to deal with an investment environment of lower returns, increased volatility, and greater uncertainty.’ He also said the new senior appointments, ‘enhanced the development of a strong leadership bench for GIC, allowing us to build new investment capabilities and extend our investment and operating platforms’.

This suggests we may well see some different approaches to real estate from GIC. It is Madeleine Cosgrave that steps into Morrish’s shoes as head of Europe. Cosgrave, at GIC one year more than Morrish, has played an integral part in building the portfolio. The senior vice president is viewed as having been groomed for her new role and she has had considerable responsibility, including overseeing GIC’s investment in Europe. At face value, it is a case of formalising a role she has been prepared for. There might be a slight bias towards retail assets as Cosgrave has overseen the European retail portfolio. She will now be responsible for setting European investment strategy, deciding on further investment in projects and joint ventures.

However, it is safe to assume that the big decisions at GIC will continue to be taken from Singapore as the new CIOs set the tone for global investment. It might be up to its European leaders to persuade Singapore why certain investments make sense. But from 1 June, look out for any signs of an evolved way of investing in real estate here, and one that matches conditions of lower returns plus greater uncertainty.

Robin Marriott is the former editor of Private Equity Real Estate