AEW is one of the world’s largest real estate asset managers with €68.2bn of assets under management as at 30 June 2019. AEW has over 700 employees, with its main offices located in Boston, London, Paris and Singapore and offers a wide range of real estate investment products including commingled funds, separate accounts and securities mandates across the full spectrum of investment strategies. AEW represents the real estate asset management platform of Natixis Investment Managers, one of the largest asset managers in the world.
AEW is one of the leading European real estate investment managers with €31.9bn of real estate assets under management in Europe as at 30 June 2019. With over 400 employees operating from 12 locations throughout Europe, AEW has a long track record of successfully implementing core, value-add and opportunistic investment strategies on behalf of its clients. In the last five years, AEW has invested and divested a total volume of over €20bn of real estate across European markets.
Industrial: The European logistics market continues to show good momentum despite a continued slowdown in portfolio sales in first half 2019. The sector benefits from increasing on-line retail penetration, outsourcing to third party logistics and positive global macro-economic growth. We expect to see positive, although geographically uneven, rental growth for the sector over the next two years amid growing occupier demand from manufacturers and retailers’ e-commerce fulfilment. Furthermore, with the current modest yet increasing levels of vacancy and moderate levels of new supply, more investors are funding new developments. Debt funding for new developments is becoming more readily available, despite many traditional bank lenders still being restricted on speculative development funding.
Office: Despite a slowdown in economic growth across Europe, unemployment remains very low in Germany and the UK. Demand for office space remains solid. With limited new stock delivered in most markets over the last five years, there is continued upward pressure for rents, especially those driven by tech-related demand. Historically low vacancy levels and the lack of large and high-quality stock is expected to drive demand for office development in Europe. We expect solid rental growth across Europe, with cities such as Berlin and Madrid among the outperformers.
There also remains potential for capturing value by focusing on the repositioning of non-institutional assets that can be improved through refurbishment and re-letting. These will typically be Class B assets in core locations or good quality assets in locations which are likely to improve due to changes in local demographics, business dynamics or infrastructure. With more facilitating planning regimes, large development pipelines are expected to persist in the CEE region over the next five years. This is likely to hold back rental growth prospects in the short term. However, the limited availability of debt finance in most other office markets for speculative development protects against over-supply.
Residential: With a long term supply-demand imbalance across many European markets, the multi-family residential sector continues to attract domestic, intra-regional and global capital. Most countries are seeing a revival in housing construction. Investors looking for higher returns are focusing on increased service segments, like student, micro and senior housing as well as new housing development in the major cities. Senior housing remains a particularly attractive emerging segment in Europe, with strong demographic and wealth fundamentals.
Retail: Despite the continuing shift to omni-channel retailing, prime high streets and large, dominant shopping centres are expected to not just survive but even prosper. This is especially the case for those with a vibrant food and beverage or entertainment component. These formats remain defensive in the face of e-commerce competition compared to other retail centre types, partly due to location strength and constraints on new supply. Continued upward pressure on rental values for prime European retail space is therefore likely despite negative headlines on corporate failures of retailers and weakness in secondary locations.
Investment Principles & strategy
Since its creation in 1981, AEW has been dedicated to creating and implementing real estate investment and asset management strategies for institutional and retail investors. AEW offers investors a wide range of investment solutions across Europe, including separate accounts and co-mingled funds across core to opportunistic strategies.
Strategic corporate development
Over the next three–five years, AEW is expecting to grow the European business by launching new funds and continuing to invest on behalf of new and existing separate account mandates. In particular, the firm is expecting to raise further institutional capital for the following funds*:
- Europe City Retail: a pan-European core fund investing in high quality retail assets located in central high street locations;
- Europe Value Partners: a pan-European value add fund aiming to provide attractive, risk adjusted returns investing in a diversified portfolio of assets;
- UK Core Property Fund: an open-ended core fund investing a diversified portfolio of assets in the UK; and
- SELF III: the third senior real estate debt fund in the series investing in senior real estate loans across Europe.
*Retail and non-sophisticated investors are not eligible to invest in these funds.
AUM is gross asset value as of 31 December 2018. Total AUM includes the assets and businesses managed by AEW Capital Management LP and its subsidiar¬ies and AEW SA and its subsidiaries and €603m in sub-advisory securities wrap accounts for which AEW provides only a model portfolio. Other infor¬mation save where otherwise indicated relate to AEW as at December 31, 2018. The address provided is that of AEW SA and is authorized and regulated by the Financial Conduct Authority / AMF (French securities regulator). The content offered is for information purposes only. It does not constitute investment advice or a recommendation nor is it an invitation or inducement to engage in investment activity. The information and opinions presented have been prepared internally and/or obtained from sources which AEW believes to be reliable, however AEW does not guarantee the accuracy, adequacy, or completeness of such information. Opinions expressed reflect prevailing market conditions at the time this material was completed and are subject to change. Investors should consider the investment objectives, risks and expenses of any strategy or product carefully before investing.
News from AEW (Real Estate - Europe)
AEW has agreed a new lease with British furniture retailer Furniture Village, which is expanding its office space at the Bath Road Central business park in Slough by 3,726 sq ft. The retailer will occupy a total of 10,926 sq ft at 258 Bath Road Central on an unexpired term of 10 years.
AEW and Natixis Asset Management complete third close for SELF II bringing commitments to over €500 million download
Two appointments to real estate debt team support further platform growth
AEW Europe City Retail Fund exceeds capital raising target following €415 million capital raise download
AEW announces it has now raised more than €415 million of equity from several international institutional investors, for the Europe City Retail Fund exceeding the Fund’s initial target of €400 million.
AEW announces that it has opened a new office in Madrid as a result of the growth in our assets under management in Spain.
AEW announces the launch of the RESIDYS Fund, its first fund dedicated entirely to French residential real estate.
News from IPE Real Assets
Vehicle targets 4% income yield once fully invested
Investment manager offloads assets five years after purchase
Equity takes Logistis vehicle to €1.7bn
LaSalle buys retail, office space for around €80m
French €25bn pension fund buys Le Triangle
White Papers / Research from AEW (Real Estate - Europe)
Factor Investing In European Offices Smart - Smart Beta Compared To Traditional Styles Q2 2019 download
In this report, we apply our new factor investing approach to close to 40 European office markets for the first time. This framework quantifies factors such as Volatility, Liquidity, Quality, Value, Yield and Growth. A comparison of our factor investing results to the traditional “core” and “value-add” investment styles is also provided.
Most cross-asset institutional investors are organised across three main departments: fixed income (or credit), equities and alternatives. Commercial real estate is typically represented in all three departments. Despite having different terminology and perspectives, investors increasingly look across departments to benefit from each other’s views on fundamental trends in the underlying credit, equity, collateral and property markets.
In absolute terms, European real estate has appeared expensive for the last year, as indicated by record low yields across all four property types.
Over the last few years, institutional investors have increased their exposure to non-traditional or alternative property types, which represented 14% of total direct real estate investment volumes in Europe in the first half of 2018.
French institutions have a low exposure to their residential sector in comparison to German and Dutch investors in their domestic markets. This offers the opportunity for an increase in residential investments in France given the size of the market.
Analysis from IPE Real Assets
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