Barings is one of the world’s largest diversified real estate investment managers, with more than $45 billion AUM* and 180 real estate clients worldwide . The Barings Real Estate (BRE) team offers a broad range of investment opportunities globally across the private debt and equity markets. BRE Europe has a team of 72 professionals, 9 offices across Europe and manages in excess of €6.8 billion of real estate assets.* The team invests across all major property sectors, with a focus on global relative value and preferred strategies driven by our in-house proprietary research group. Barings’ distinctive investment style is executed by local teams and enables us to seek to deliver compelling returns to our investors.
*As at September 30, 2020.
Our competitive advantages:
Depth of Team — The BRE team consists of over 290 investment professionals across debt and equity spanning the entire investment process. In-house acquisitions and origination, investment management, asset management, portfolio management, research and analytics, risk management, capital markets—as well as specialty roles such as engineering, tax and legal—ensure continuous collaboration throughout each investment’s life.
Sourcing Capabilities — Locally embedded teams enhance market connectivity through their strong networks of property owners, institutional investors, developers and banks. This connectivity provides robust volume and access to attractive on-market and rare off-market deal flow.
Focus on Asset Management — BRE has a fully integrated asset management team and unlocks value through active management, regardless of investment style. Asset Managers are sector specialists and regionally dispersed to best understand the nuances of each individual asset’s demands.
Global Platform — BRE invests around the globe, in 11 countries, managed by 25 local offices. BRE’s equity, debt, private and public real estate capabilities are designed to promote constant market participation—uncovering the interconnectivity between markets, economies and cycles, with the objective of making better informed decisions on behalf of our clients.
Cycle-Tested Approach — BRE’s long track record of investing across multiple cycles, the risk spectrum and geographies creates the experience necessary to understand how real estate responds to changing conditions.
Diversified Solutions — BRE strives to be a strategic partner to our investors, and tailors solutions to each client’s goals and objectives. The platform offers investment solutions through funds, separate accounts and joint ventures. Solutions can include independent or multi-asset portfolios across BRE equity and debt, Barings Alternative Investments and Barings Fixed Income and Equity.
Parent Company Stability — As part of MassMutual, BRE has the financial stability and flexibility to take a long-term approach. This support is illustrated by its long-standing investment management mandate for MassMutual’s General Investment Account, and its ongoing support for existing and new products.
*As of June 30, 2020. Barings Real Estate is a part of Barings LLC, a Registered Investment Adviser.
Occupier demand has consistently outpaced new supply over the past decade, and the vacancy rate has fallen steadily, with some exceptions (e.g. Singapore and Shanghai). Globally, the industrial sector has been on the ascent due to the expansion of online retail. However, a number of headwinds—including rising U.S.-China trade tensions, civil disruption in Hong Kong and, of course, the emergence of COVID-19—may now be coalescing. For example, the combination of heightened trade tensions and the COVID-19 outbreak could mean many Western nations are now revaluating their reliance on fragile global supply chains, and may now be looking to potentially on-shore a greater proportion of production. If we do see a meaningful industrial capacity shift from East to West, manufacturing intensive economies could be vulnerable in the face of this trend. We would therefore tend to favor industrial property markets focused on established, fast-growing domestic consumer markets over the more traditional, port-centric logistics locations.
Major office centers in the region have benefitted from sustained demand over the last decade, with APAC vacancy below the long-run average. Vacancy is concentrated in Chinese cities, with more pain expected in Hong Kong with COVID-19, civil disruption, and the introduction of controversial national security laws from the mainland likely to deter corporate upsizing and new entrants. A near-term deterioration in office market conditions is now expected across the region, in line with falling GDP associated with COVID-19. The strict lockdowns recently implemented in a number of Asian cities have forced companies to operate remotely for some period of time. Longer term, broader adoption of working remotely could undermine aggregate demand for office space. However, uncertainty reigns around offices, with counter arguments that worker densities will fall (e.g. reconfiguring to accommodate social distancing and larger collaborative spaces, etc.), potentially providing a positive support to occupational requirements.
Lockdowns across APAC have impeded consumers’ ability to visit stores and economic uncertainty has fed into concerns about job security. Consequently, consumer confidence and retail sales have deteriorated sharply. The retail sector was already facing structural challenges in the form of e-commerce, which the pandemic has only accelerated. The COVID-19 crisis will further exacerbate the ongoing disruption to the traditional retail model, with many retailers falling into administration/bankruptcy. One area that has been comparatively resilient is the grocery sector, as residents stock-piled items for lockdown. While the grocery sector is not immune from online retail, some of this resiliency can be expected to continue (particularly where online grocery delivery is cost prohibitive). Overall, the COVID-19 outbreak is likely to accelerate the long-term structural shift to online retail, particularly if customers who were compelled to use these services during the pandemic adopt online shopping once the threat of COVID-19 has diminished.
Investment Principles and Strategy
Barings maintains an absolute commitment to working with our clients to help them achieve their investment objectives, while remaining alert to the cyclical nature of real estate opportunities and the wisdom of balancing return potential with risk management.
Our Approach to Real Estate Investment
· We operate on a global platform. Our competencies cover a broad spectrum of real estate investment alternatives, comprising private real estate equity and debt across all major property sectors. Our breadth of capabilities allows us to respond accordingly to cyclical opportunities as they arise.
· Research is at the center of our investment decision-making, from formulating client-specific strategies across real estate, to tactical execution at the portfolio and asset levels. We apply fundamental research of global economics and the capital market forces that drive relative value.
· Real estate remains dominated by private market relationships and negotiated transactions. Our locally-based professionals bring years of cycle-tested experience, and our extensive history in real estate debt and equity markets provides a competitive advantage in accessing and negotiating transactions.
Strategic Corporate Development
BRE’s long-term strategic business plan represents a careful balance between the institutional appetite for real estate investment and the effective execution of prudent real estate investment and portfolio management strategies. Growth initiatives are undertaken as supported by our proprietary research and focused investment strategies, as well as the resources, capacities and competencies of the firm. We have consistently and strategically served our clients and are prepared to grow the business as opportunities develop. As a subsidiary of MassMutual, Barings has the resources to develop and execute new strategies and products. Future growth of the platform will occur as strategic opportunities arise, and we intend to expand our investment offering in response to compelling opportunities and investor requirements.
Performance of each portfolio is measured against the relevant benchmark(s) that are the accepted standard(s) for each of the funds under management. All of our real estate managed funds are audited externally each year. Additional performance information is available upon request.
Commentaries on the economy and financial markets contained herein are based on information believed to be reliable, although there can be no guarantee as to its accuracy. They reflect the current opinion of the firm, which is subject to change based on changes in the economy and financial markets, and access to and reliability of relevant data. The forecasts should not be relied upon as investment advice. Data as of June 30, 2020.