APG, the asset management arm of Dutch civil servants pension fund ABP, is focusing increasingly on developing new product in partnership with operators and specialists, its global real estate head Patrick Kanters has told PropertyEU.
'We are in the fortunate position that we started building up our exposure to real estate several decades ago,' Kanters said. 'We're more interested in complex ownership structures and investments where we can restructure and scale up.'
APG generally steers away from 'straightforward' transactions or auctions of super-prime, super-core assets, he added. 'We’re much more cautious about taking part in auctions for super-prime, super-core assets. That's not for us. The competition keeps us away.'
Instead, APG is increasingly opting for investments via corporate structures, club deals or joint ventures to scale up its best existing investments, Kanters explained. 'We like to have a minority stake in an operating company as that gives us control over the strategic decisions related to these platforms. Participation in operating companies is crucial to creating value and minimising conflict of interest. We like to take stakes in companies with growth potential so we can reap these benefits.'
While the number of sectors in which APG is active is quite diverse, Kanters is keen not to spread investments too thin. 'The focus is on scalable investments. For us an investment of €100 mln is small. We are interested in scaling up allocations from €200 mln to €1 bn.'
Kanters points to APG's investment in Dutch hotel chain Citizen M. 'We started off with a very small operation, just one hotel in Amsterdam. Now the chain has seven hotels in cities around the world with 1,600 rooms. This develop-to-own strategy is really gaining traction. By 2020 more than 7,000 rooms will be operational. A second hotel is due to open in New York next year, as well as two in London this year. The new London hotel is located right opposite the Tower of London and is really a Citizen M 3.0. The hotel is bigger, with more rooms and bigger lounges and the design is even more spectacular.'
The full interview is published in the October issue of PropertyEU Magazine
