AEW is one of the world’s largest real estate asset managers with€69.8bn of assets under management as at 31 December 2020. AEW has over 750 employees, with its main offices located in Boston, London, Paris and Singapore, and offers a wide range of real estate investment products including comingled 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 over €34.6bn of real estate assets under management in Europe as at 31 December 2020. 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 €21bn of real estate across European markets.
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Industrial: With e-commerce being one of the big drivers of demand for European logistics space, it has benefitted significantly from the Covid-pandemic as consumer spending was re-directed even more quickly to on-line platforms. The Covd-19 lockdowns forced traditional stores to close and customers to stay at home, making e-commerce platforms the obvious consumer option. As a result, the logistics market was able to keep its good momentum going in a year when economic growth suffered. In the post-Covid 2021-22 recovery we expect consumers to return to their traditional spending habits and e-commerce penetration to take a temporary step back. However, we still expect to see positive rent growth for the sector for the next two years amid growing occupier demand. With more investors funding speculative development, we are seeing an increase from recent record low vacancies. But, since debt funding for such speculative developments remains unavailable from most bank lenders, it seems reasonable to expect new supply to remain sustainable.
Office: Covid-19 lockdowns forced most European office workers to work from home. As some global leading tech companies announced plans to allow their staff to work from home going forward, it has raised the question whether demand for office will return to pre-Covid levels. In the long term, we feel that the basic human need for social interaction as colleagues, service providers and clients will safeguard the demand for physical office space. But in the meantime unemployment is now expected to increase across most of Europe driving demand for office space down and putting downward pressure for rents across most prime office markets. But, with low vacancy levels and a modest pipeline for new office developments, we still expect prime office rental growth across Europe. Potential remains for capturing value by focusing on the repositioning of over-leveraged and non-institutional assets that can be improved through refurbishment and re-letting. This might fit in well with the increased green agenda of both occupiers and investors alike as regulators are formulating domestic regulations to meet the climate targets set in the Paris accord. The limited availability of debt finance in most office markets for speculative development should enable the market to avoid the worst of the upcoming cyclical downturn.
Residential: Multiple and prolonged lockdowns have isolated the multi-family residential sector from the worst of the Covid-19 impact. The long term supply-demand imbalances remain cross many European markets leading the sector to attract more institutional capital. Post-Covid 19, the revival in housing construction should be resumed, while rent controls remain on the agenda in selected high cost cities, despite recent Covid-related rent declines. Investors looking for higher returns are focusing on sustainable and affordable housing developments in the major European cities. Covid-19 has brought back interest for lower density suburban sub-markets. But as the vaccinations are rolled out, we suspect a healthy rebound for re-priced inner city living. Senior housing has built further momentum as an attractive emerging segment in Europe, with strong demographic and wealth fundamentals.
Retail: Covid-19 lockdowns across Europe hit retail particularly hard in 2020. It further increased the already strong pressure from online retail and triggered the failure of an increasing number of retailers, particularly in the UK. Many retail tenants struggled to pay rents and have been negotiating rent concessions and lease restructurings. But in the post-Covid recovery, it is widely expected that consumer spending will grow even faster than GDP, as consumers release pent-up demand. As travel bans and restrictions are lifted, we expect that prime high streets and dominant shopping centres will prosper again. The sub-sectors most severely hit should also recover most, like centres and high street locations with a vibrant food and beverage or entertainment component. Regardless of this rebound, we expect that retailers’ shift to omni-channel sales channels will continue. Also, we expect investors to focus more on value add opportunities with change of use away from retail and redevelopments integrating retail in multi-use urban centres.
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 to 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 capital for the following funds*:
- EUROCORE: an open-ended, pan-European core fund aiming to build up a modern, future-proof and well diversified portfolio;
- Europe City Retail: a pan-European core fund investing in high-quality retail assets located in central high street locations;
- Europe Value Partners II: a pan-European value-add fund aiming to pro- vide attractive, risk-adjusted returns investing in a diversified portfolio of assets;
- UK Urban Real Estate Fund: a closed-ended, value-add fund investing in a diversified portfolio of assets across the UK; and
- UK Core Property Fund: an open-ended core fund investing in a diversified portfolio of assets in the UK.
* Retail and non-sophisticated investors are not eligible to invest in these funds.
AEW measures its performance against a number of benchmarks specific to investment strategy and style. The results of each portfolio are periodically audited by independent third parties and audited financial statements provided to clients.
Total AUM includes the assets and businesses managed by AEW SA and its subsidiaries and AEW Capital Management and its subsidiaries and $258m in sub-advisory securities wrap accounts for which AEW Capital Management provides only a model portfolio. Information relates to AEW as at 31 December 2020. 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 recom- mendation nor is it an invitation or inducement to engage in investment activity. The informa- tion 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.