Quintain pins strategic hopes on third-party funds
UK - Listed property company Quintain has laid out a growth strategy that targets increasing its funds under management to £2bn (€2.2bn) by 2013, as well as attracting third-party capital to urban regeneration projects.
In its annual report published on Friday, Quintain, which currently has funds worth £1.27bn and has Dutch asset manager PGGM as a major shareholder, said it would focus on specialist funds for healthcare, science parks and student accommodation.
Data published today by the Association of Real Estate Funds (AREF) indicate specialist funds outperformed balanced funds over the past six quarters, following underperformance for the previous 11 quarters. AREF attributed the performance to leverage trends and sector weightings over the past year.
Quintain's optimism for the healthcare sector is predicated on positive demographics, notably an ageing population, and limited competition in a market where existing players are currently struggling with government policy, as well as public spending plans, tight regulation and rising costs.
The company also hinted at likely deals later this financial year with investment partners "who also see a long-term opportunity in this sector to invest in operators with a proven track record".
Meanwhile, despite increased competition among providers in the student accommodation market, Quintain claimed new entrants would take time "to build up their presence" and would struggle to source quality assets.
One of its student accommodation funds, iQ, a 13-asset joint venture with the Wellcome Trust, increased its size to £309m this year, with a new asset scheduled to come onstream by 2012. Another, with Aviva Investors, has assets under management of £1.5bn.
According to its report, Quintain will also continue to focus on urban regeneration within London - but with the participation of third-party financial investors either directly or via new residential funds.
Currently, 62.8% of the group's £1.15bn in assets under management are in the capital, concentrated in large projects in Wembley City and the Greenwich Peninsula. It will restart its development programme at Greenwich this year, with the planned - but unspecified - participation of one or more financial investors.
In addition to specialist funds and regeneration, the firm said it would focus this year on "judicious investment" in secondary commercial real estate assets.
Although it acknowledged the market had yet to see a sustained recovery, its annual report identified opportunities in secondary properties for high yields via asset management opportunities.