Dutch privately-owned real estate investment manager Redevco has announced plans to expand its real estate portfolio by including other asset classes beyond the retail sector.
Redevco, which currently manages €7.5 bn of real estate, said it is targeting a portfolio of €10 bn over five years largely by opening its investment platform to like-minded investors and by broadening its investor base, with an initial focus on joint ventures.
Since the company launched its third-party business six years ago, the activities have grown to represent 40% of Redevco’s capital base, or €2.8 bn at present.
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.’
Vaughan continued: ‘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. By partnering with a broader spectrum of like-minded investors and diversifying into new property sectors, such as offices and last-mile logistics, we will further build on the success we’ve already achieved in residential markets in the past 18 months. Future investments will largely be concentrated in mixed-use urban locations, as the blurring of boundaries between real estate asset classes accelerates.’
Redevco’s core retail real estate portfolio has substantially outperformed the European investment benchmark for the past decade. 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 bn compared with €7.3 bn in 2016, although the number of properties has fallen by 23% in the past three years alone.
Redevco has also significantly 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. Today less than 50% of the rental roll is in fashion retail, with 16% in popular urban leisure segments like theatres, cinemas and Food & Beverage concepts.
At the asset level, active portfolio management has included re-leasing to extend the tenant mix and re-purpose space for other types of tenants such as F&B outlets, museums, flagship or brand experience stores, that fall outside the traditional retail brands.
Andrew Vaughan concluded: ‘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. 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. Through four signature projects related to a retail transformation scheme, a residential development, an inner-city shopping centre refurbishment and on-site renewable energy generation innovations, we are stepping up our part in the fight against global warming.’
