Redevco, the privately owned real estate investment manager best known for its retail investments, is adapting and expanding its business model as it seeks to increase AUM from €7.5bn to €10 bn by 2025.
The company says it has undergone constant reinventions over its 20-year history and is set to do that again in response to market changes and wishes of its investor clients.
Though it ‘fundamentally believes’ in retail property, it is eyeing more food and beverage, leisure, residential, office and urban logistics, sometimes via a combination of those categories within mixed use schemes.
A sign of the shifting retail market is exemplified by Redevco’s Le 31 in Lille. Acquired in 2017 for its joint venture with Hermes Investment Management, Redevco initially thought it would create three big units for fashion retailers, but it has been transformed instead into a 25,000 m 2 mixed use project comprising retail, F&B, leisure, office and coworking space and an OKKO hotel plus 600 parking space in what it dubbed “mixed-use 3.0”.
Redevco has struck three joint ventures – with Hermes, Ares Management and PGGM - from 2015 to 2017. It sees growth coming via such ‘third party asset management’. Third party investors now comprise 40% of its €2.8 bn capital base compared with zero six years ago.
Also on the table for the first time is the option to launch a commingled discretionary fund, which the company has only been contemplating over the past two years.
Andrew Vaughan, Redevco CEO, said: ‘Urban areas are changing rapidly and, in parallel, also the demands on the use of real estate space. Redevco’s research-led insights into the dynamic forces that are driving the evolution of city landscapes have always steered our investment strategies and allowed us to keep on top of these fast-moving market trends.
‘So, we see a great opportunity to leverage our pan-European investment platform and local specialist teams across 13 national markets to substantially grow the portfolio over the next five years.’
He added, ‘Future investments will largely be concentrated in mixed-use urban locations, as the blurring of boundaries between real estate asset classes accelerates.’
At the end of 2019, Redevco managed a total of 301 retail assets across European markets, a decline of more than 60% from 2011, when it began divesting properties that no longer matched its strategic investment view.
The value of the portfolio has ticked higher to €7.5 billion compared with €7.3 bn in 2016, although the number of properties has fallen by 23% in the past three years. The company said that demonstrated how individual size and quality of the underlying assets had increased despite the deteriorating market background.
Redevco has also restructured the share of different retail segments within its portfolio. Some 75% of the investment manager’s acquisitions in the past five years have been outside of fashion retail, which in the past comprised by far the greatest proportion of rental income. Fashion retail is now less than 50% of the rental roll, with 16% in popular urban leisure segments like theatres, cinemas and F&B.
‘We have taken huge strides in restructuring our core retail portfolio in the past few years, while maintaining a very healthy level of returns for our investors,’ explained Vaughan.
‘Future proofing also means improving the sustainability of our assets. Towards the end of last year, we committed to making our entire portfolio Net Zero Carbon by 2040.’
Redevco’s parent company is family owned Cofra Holding based in the Netherlands. Before its creation in 1999 it was effectively the corporate real estate manager for its sister retail company C&A of department store fame.
It has been through many changes having originally gone into offices and logistics in the 2000s as well as expanding overseas in China, Brazil and India. At one point, it had 15 offices around the world and over 350 people.
In 2011 it refocused on Europe and retail. A year later, it sold €1 bn of property across its markets. In 2013, it then prepared to open up to third party investors. In 2015, it signed a JV with Ares.
It made its first investment into the residential sector in 2018 in Amsterdam.
