Kamco Invest, the Kuwaiti-based firm that manages investments on behalf of Middle Eastern investors, is prepared to branch out its real estate investing activities towards the Netherlands and the Nordic region.
Kamco began its foray into international real estate from 2015 onwards, focusing on the largest markets in the world in the US, the UK, and Continental Europe - mainly Germany.
But according to Mohammad F. Al Othman, executive director of real estate, the current cycle could see it embark on making investments in other territories.
Speaking in a seminar hosted by UK investment partner, M7 Real Estate, the Middle Eastern asset manager said as well as making ‘follow- ons’ from transactions in the UK, Kamco was also ‘looking at other countries, specifically the Netherlands and Nordics’.
He added, ‘We continue to find interesting opportunities.’
Earlier in the discussion, Al Othman explained Kamco’s strategy was to preserve capital. ‘Our investor base is looking for single-tenant assets with long-term leases,’ he said.
The Kuwaiti company has invested in 15 property deals over 5 years as part of its international expansion.
In February this year, it emerged Kamco had partnered with M7 in acquiring three regional assets for £65 mln (€74 mln) to add them to its UK office portfolio.
The three properties are Artadius House in Cardiff, Keypoint in Bristol, and Objects House in Maidenhead, acquired from private and corporate owners. The three buildings, which each include single-occupancy tenants, exceed 213,000 sq ft of floor space in total.
Kamco and M7 now have over 420,000 sq ft of UK offices together.
Al Othman said that Kamco was developing its relationship with M7 by focussing on regional offices but ‘diverting a bit’ from a core strategy into core plus via possible lease extensions.
With design of office space and flexibility becoming more relevant, he suggested the same trends were playing out across the US and other markets in the wake of covid-19.
He noted tenants had signed leases at the peak of the pandemic in the US in July and August.
‘We think long term leases of 10-years plus will continue to be relevant in the near future,’ he said.
M7 CEO David Ebbrell said there was a ‘relatively unique opportunity to access mispriced properties in the office market.’
‘There is value add pricing for what we see as core plus returns. We still think we can get very interesting cash on cash returns and we are cautiously positive.’
He noted there was more than 4 mln sq ft of regional UK office take up in 2020, which he described as ‘subdued’, but ‘still there’ in terms of activity.
In the Netherlands, he noted a much higher degree of flexibility among the work force pre-covid-19 that led to the ‘De-densification of workspace’ and an increasing focus on collaboration space.
Al Othman said Kamco’s investor base had an emotional connection to the UK and that almost all of its investors were Saudi.
The Brexit vote led to concern, but the company still sealed a deal in Scotland in the middle of the Referendum.
Speaking on the current attitude of Middle Eastern investors towards the UK, he said: ‘We still see strong and healthy appetite that we think will remain.’
He also mentioned how Kamco had always found lenders willing to lend, citing Aviva Investors as having provided financing on several of its transactions.
According to him, traditionally Middle East investors look for 7-8% cash on cash returns from core plus assets in strong locations. He confided there was some ‘worry’ about leases changing. ‘They have a right to be concerned about them, but they trust the partner that they’re investing with. There has been a shift with the investors’ demand for returns primarily because of the prevailing low interest rates and returns on fixed income such as deposits.’
Kamco manages an AUM of around $12.9bn (€10.6 bn) as of 31 December 2020, in various asset classes and jurisdictions, making it the fifth largest asset manager in the GCC according to Moody’s asset management report dated September 2019.
