DTZ Investors (DTZI) is a specialist asset manager with a 50-year track record of creating value for clients across global real estate markets. DTZI manages €15bn ($17bn) of assets for a range of high-profile institutional investor clients. With a team of over 100 personnel in its main offices in London, Paris and Tokyo, DTZI offers multiple real estate investment solutions for clients including commingled funds, separate accounts, club deals and fund-of-funds.
Investment principles & strategy
DTZI generates long-term superior returns for clients by customising an integrated service that marries their investment objectives with a detailed knowledge of real estate markets, responsible investment and the value-creation process. Our approach relies on five key beliefs:
Act responsibly – We take responsibility for delivering on our clients’ return objectives within their risk parameters through a customised approach that marries global investment know-how with local market expertise. Our responsible investment philosophy combines environmental and wider societal benefits with financial returns that are assessed over the very long term.
Take controllable risks – We have strong processes to identify, price and manage risk. We assess returns at an asset level and balance risk at the portfolio level. We avoid location and credit risk and take on leasing and obsolescence risk that can be priced and managed.
Persistence pays – Strong processes and detailed due diligence avoid mistakes, secure value and ensure liquidity in portfolios. We marry strong processes with a two-stage governance process that assesses price and risk on all transactions over the very long term.
Generate value through active management – We operate vertically integrated teams that understand building design, occupier need and asset potential to engineer value. We marry this with a deep knowledge of the capital markets to determine how best to finance value creation.
Sell well – A strong sell-discipline is essential in understanding when an asset’s place is no longer justified in a portfolio. Through a combination of investment process and governance, we constantly review our sales process to crystallise returns or mitigate risks.
High inflation, rapid monetary tightening and geopolitical pressures will weigh on property yields, occupier demand and investor sentiment causing sector returns to converge this year. The alternative and the convenience retail sectors will be among the better performing sectors in 2022 as a combination of relatively high yields and positive income growth supports total returns. Assets with inflation or index-linked income streams should also fare well, while strong fundamentals and solid rental growth will continue to underpin industrial total returns in the near term.
Healthy levels of take up, historically low vacancy rates and tight supply conditions should support industrial pricing and performance in 2022, but the prospect of weaker economic activity and rising bond yields could put pressure on pricing and occupier demand in 2023.
- Modern, operationally efficient estates that are situated within final-kilometre destinations of consumers will remain highly preferable to occupiers and should reward investors with more sustainable performance over time.
- Weak employment growth and an increase in new supply will cause rental growth to slow in the near term, while the shift to hybrid working practices will weigh on office demand over time.
- The commitment of corporates to more stringent net-zero targets will raise the requirements for well-located, high-quality, ESG-compliant buildings from occupiers, leading to the emergence of a two-tier office market.
- Soaring living costs and tighter monetary policy conditions will reduce households’ spending power delaying the rental growth recovery in the short-term. Non-discretionary retail segments, such as out-of-town retail parks and grocery-anchored retail stores, should prove more resilient in the current climate, while shopping centres and high street retail will continue to be impacted by the structural changes in consumers’ shopping habits and increased e-commerce sales.
- European demographics favour investing at either end of the age spectrum. The residential and multi-family sectors should offer stable income and positive income growth where demographics are compelling; Europe’s ageing population will continue to support occupier demand in the senior living sector. While the low supply of high-quality, convenient and well-connected urban accommodation for the young across Europe’s major cities should support the performance of PBSA.
- The alternative sectors will remain in high demand from investors in search of portfolio diversification and higher returns. Investors should be prepared to take on more operational risk to earn better returns. Alternatives such as car parks and data centres are still favoured for their long-dated cashflows and operator credit quality, while the prospects for hotels should be more appealing once international tourism recovers.
Strategic corporate development
We continue to develop our business to meet the needs of our clients. Development comprises geographic platform expansion, service lines, sectors and investment products.
Our geographic focus remains on the 30 principal urban economic centres that dominate the European real estate markets. Our non-domestic clients, in particular, have a requirement for complex, bundled services on large-scale assets in these markets.
We will continue to focus on real estate development, particularly in growth markets where technology is driving demand for a new type of real estate that is more flexible than current stock. This will extend to our recent investment programmes in logistics and urban living. We will continue to partner with best-in-class operators in these markets where appropriate.
We expect the market dislocation caused by the economic crisis to create real opportunity for value-add investors who need an active manager to assemble portfolios of scale and manage to core over the mid term. We will align our capital with such like-minded investors.
We are committed to reducing our own and our sector’s impact on the environment. We will continue to develop our responsible investment programme, working with agencies such as the PRI, GRESB, IIGCC, TCFD and Better Buildings Partnership to deliver transparent improvements to our managed portfolios.
Our UK track record is benchmarked against the MSCI Index and is compliant with the Global Investment Performance Standards (GIPS). In the UK we have an exceptional performance track record; we have won 16 prestigious MSCI performance awards since 2000 and we also received an award for the top performing fund on a 10 year basis in the UK and in Europe in 2022. Our house performance has beaten the MSCI benchmark by 1.7% pa on average over the past 20 years to December 2021. In Continental Europe, we won the ‘Pierre d’Or’ as Best Asset Manager of the year and the European Pensions award for Best Asset Manager reflecting our work for a range of value-add strategies in offices, residential and logistics.
DTZ Investors complies with applicable laws and regulations. The firm operates a Global Code of Ethics for its businesses that includes its investment and asset management operations. The Board establishes the compliance framework for its entities and is implemented by Senior Management. In addition, the Group Compliance Manager works to ensure compliance of the firm’s regulated activities and retains third-party auditors to monitor compliance.