By moving into alternatives and making existing assets more mixed-use, family-owned Redevco is aiming to become a ‘multi-client, multi-sector’ investment manager.
Redevco, the Dutch property company owned by the family behind the famous C&A department stores, decided a while ago it needed to diversify beyond retail in order to be better able to realise growth and to spread the risk of being invested in only one asset class, particularly one that is under pressure.
At the end of 2018, it acquired a first residential project and it is now planning to extend its scope into urban real estate such as urban logistics and alternatives via data centres and digital infrastructure. It is also working on transforming its existing portfolios by injecting more mixed-use elements and therefore wishes to become a multi-client, multi-sector investment manager.
For many years the company has used an in-house City Attractiveness tool to guide location investment decisions. This resulted in a ‘quality upgrade’ of the portfolio, says fund manager, Marrit Laning.
Way back in 2011, Redevco began selling off assets in locations that no longer fitted the strategy and so the AUM of the group fell by more than 60%. In the past three years alone, the number of assets has declined 23%, while maintaining the portfolio value. ‘These portfolio developments demonstrate that the individual size and quality of the underlying asset base has increased despite the deteriorating market background,’ explains Laning. ‘We have been able to build solid resilience into the portfolio through highly focused investment and active asset management strategies based on our research model.’
She continues: ‘We fundamentally believe in cities; hence we are focusing on projects in the urban areas. Throughout our history the urban environment is the connecting factor, where we have always operated and continue to play. The complex challenges cities are facing today and in the future offer business opportunities. Particularly the transformation of retail obviously is a big topic for us, and it is also something in which we have vast experience. Looking at our current portfolio, we see the need and opportunities for redeveloping or transforming what used to be all retail into mixed-use locations where the blend of these functions exceeds the sum of the parts.’
Resilient retail
The company has found Covid-19 has only accelerated the transformation in retail. Especially retailers which used to focus on driving turnover solely through the store by being at high-traffic locations in prime high streets are suffering. ‘Although we believe that after the pandemic people will want to go out again and do things, the dependence on sales volumes in stores should become something of the past.’
However, not all retail is equal. For example, some retail parks have proved resilient. Laning believes that is because they cater to the specific need of ‘convenience’.
‘The supermarket is often, if not always, the anchor tenant drawing a fair number of consumers to the retail park. If the park offers additional services and mostly convenience-related retail, it is a good reason for consumers to come back. In this time of Covid-19, people are focused on safe shopping and on doing only what is essential. Since grocery shopping is a basic, recurring need and retail parks in general are spacious and capable of maintaining the distancing measures, retail parks have been performing above average in the past few months.’
Blend of tenants
Returning to the theme of transformation, a good example is Redevco’s project in Lille, France. Le 31 is a 25,000 m2 redevelopment project that offers a mix of leisure and entertainment activities, street food, streetwear, a hotel, and co-working spaces. The offer of Le 31 has been carefully curated in order to create an iconic ‘3.0 mixed-use scheme’ with the ability of developing into a platform beyond a traditional commercial area.
‘The aim is to unite a special blend of tenants that jointly offer a unique combination of products and services, creating something greater than the sum of its parts. In terms of the occupiers, Redevco specifically focused on entrepreneurs that understand the new ways of living and working in today’s society and pledged to contribute to an innovative and dynamic urban concept. The result is a mix of strong, complementary brands that include leisure activities, streetwear, street food, hotel, offices and coworking, including the likes of Citadium, Climb Up, Decathlon, Fitness Park, Grand Scene, Okko, Team Break and Wojo.
