INTERVIEW: CBRE GI poised to become net buyer in 2014

After being a net vendor in the last couple of years due to maturing funds, CBRE Global Investors is poised to become a net buyer in 2014.

‘We are not an asset collector, we are an active manager and our goal is to materialise returns,’ the company’s European head CEO Pieter Hendrikse told PropertyEU in an interview. ‘But this year, we will be more active as a buyer for all kinds of new strategies. The trick is to execute new programmes in line with the strategies that we have set out.’

For the coming year, Hendrikse sees deal volume in Europe totalling some €6-6.5 bn. Disposals will account for roughly €2.5-3 bn of that figure while acquisitions are expected to total around €3-3.5 bn, he said. ‘This is a serious call which should have a net positive effect on our AUM growth this year.’

On Monday, CBRE Global Investors announced it has completed the purchase of a retail arcade and adjoining office building in Birmingham from Aviva Investors on behalf of the CBRE UK Property Fund, which invests throughout the UK on behalf of over 45 institutional investors and has a portfolio of £568 mln. That deal followed hard on the heels of the purchase of a portfolio of three logistics assets in Germany on behalf of a separate account client from an open-ended fund managed by Raiffeisen Capital Management.

Almost three years after the takeover of ING REIM by CBRE Investors, Hendrikse is now looking forward again and actively pursuing leads to expand existing programmes and create new business.
While funds played a major role in the business pre-financial crisis, CBRE GI is now profiling itself as a broader investment manager with a mixed offering of structured investment vehicles, separate accounts and global multi-manager mandates.

Hendrikse described the new period in which the fund manager finds itself as one ‘of stability’. ‘We’ve emerged healthy out of the crisis despite some of the risks. Some of our fund vehicles have experienced pain, but that was due more to the market cycle than to the intrinsic quality of the assets. After the merger, we spent time revising and renewing our company strategy in EMEA; we looked at what we had, what we had to do and what we would like to do. That is all behind us now. We have survived and have moved through the storm. We have made a big and serious transition in terms of integration and formulating a new strategy, culture and policy in the middle of the stress of the crisis and during the liquidation of some of our funds. We are now already there.’

RISK-RETURN RELATIONSHIP
In many respects, the property market has started from scratch again, he noted, pointing to the new market circumstances and new allocation behaviour. ‘We’re seeing new lenders, new sources of capital and supply and we are able to accommodate different strategies in multiple geographies and sectors with specific risk-return requirements.’ Looking forward, the key challenge Hendrikse sees is managing the risk-return relationship. ‘We need to do that well and we need to be sure that the path we have chosen is the right one. It’s like making a choice in life, knowing what to do is extremely important. Having a vision is essential.’

Given the wide spectrum of geographies and sectors in which CBRE GI is active, it does not come as a surprise that the investment management giant is now seeking to position its European platform in a global context.

‘Thanks to the merger with CBRE Investors, we can now seriously tap into global capital and capital in other regions outside Europe,’ Hendrikse said. ‘We offer access to a true European real estate platform as we have had a pan-European approach for almost 20 years. We have now opened up our European structure and are moving away from a country-specific approach to a pan-European one.’

That strategy has already started to bear fruit, he added: ‘We’re seeing a serious inflow of non-European capital, from the US, Asia and the Middle East.’ In the post-crisis environment, access to property and asset management are prerequisites, Hendrikse argued. ‘We’ve seen a serious change here. Europe has learned from the crisis and the value movements that have taken place. Buyers who have learned from the past and who understand what Europe is, are looking for a global manager. Sometimes they are stepping into Europe for the first time and that means there’s a learning curve.’

Click on the links below for additional excerpts from the interview