With €30bn of assets under management, 61 investment funds managed, assets located in nine euro-zone countries and teams based in the main markets, Primonial REIM is a key player in the European real estate asset management sector.

Our global vision, combined with in-depth knowledge of the local markets, gives us special access to the European real estate markets so that our institutional and individual clients can benefit from the best opportunities. We devise, structure and manage a wide range of real estate investment solutions for these clients that are appropriate to their risk profiles and strategies and generate income over the long term.

Strategic corporate development

  • A belief-based management style taking into account macro and micro economic dynamics as well as demographic and societal developments.
  • Robust asset allocation based on the sector, geographic and product diversification.
  • A wide range of investment solutions with readable strategies by fund offering, recurring and attractive income with moderate risk taking.
  • A pioneer and leader position in responsible investments with an ESG approach integrated into the value creation chain and massive investments in socially useful sectors such as healthcare/education property or affordable residential property.

Sector forecasts

OFFICE: Office markets with an attractive location are best positioned for the current cycle in terms of value, income and liquidity. The crisis we are living through has led many areas of business activity to adopt remote working on a massive scale. The question then quickly arose as to the adequacy of real estate portfolios in relation to the future needs for office space. While the hypothesis of a 100% teleworking future has gained traction, it has not held up to the socialisation needs of the individuals actually employed in companies. This observation has led proponents to move towards a hybrid organisation of work (office, third places, homeworking).

With this arrangement, remote working will not exceed one or two days a week. This work pattern should enable employee commitment, innovation and overall staff productivity to be guaranteed. These criteria will in turn determine the future design of workplaces. The diversification of locations and the guarantee of operational efficiency will be key criteria in optimising an office portfolio.

The core assets/markets that have adapted to the new characteristics of the future workplace, with established tenants and long leases, should have the best prospects for the valuation and future growth of rents, whereas the least secure or obsolete assets might experience corrections (secondary locations, lengthy vacancies, unsuitability for new uses), which could affect the capacity of these properties/markets to deliver a high level of performance in the medium term. On the other hand, there will be opportunities to be seized in aspiring districts that feature offices adapted to new uses with the gradual recovery in take-up.

RESIDENTIAL: The basic features of the residential markets in the eurozone are well oriented to enable the overwhelming majority of large European cities to ensure value growth in 2021. We are maintaining our outlook for residential price growth in the euro-zone due to favourable economic aggregates (sustained household purchasing power and low interest rates).

In the event of a correction, we believe that the phenomenon will be limited geographically (a territory, a big city) or in time (quarter, half-year) and will be mainly technical (a temporary imbalance between supply and demand that cannot be ignored). The question of the rent cycle does not really arise at the moment due to the intervention of the authorities in many countries, but the question of the price cycle must be posed. Price corrections could indeed stem from excessively big changes, such as a significant rise in interest rates, abnormally high prices per sqm or a growth in prices that is not justified by the market fundamentals. However, we believe that, in the present context, the rise that is to follow will compensate quite quickly for the readjustment due to the demographic pressure on many markets and to interest rates that are still at low levels. Over the 2021–25 period, most European residential markets share a positive outlook for capital and rental performance.

RETAIL: Structural changes in the sector and the restrictive measures had a strong impact on the value and rents of business in 2020, and a phase of transition towards stabilisation has begun. However, businesses facing an underlying problem will have to be repositioned or restructured to meet the new consumer needs. The easing phenomenon observed in 2020 will give way in 2021, quarter after quarter, to a phase of stabilisation or even reduction in some markets that have experienced a correction that was too severe when seen against their basic features.

As for location, we believe that ground-floor assets and shopping centres in the most favoured core European markets that come up to the new consumer expectations should have the best prospects for the valuation and future growth of rents, while assets in a secondary location, with significant vacancies or featuring retailers shunned by consumers, may find their performance impaired. Finally, rigorous selection should make it possible to seize the promising opportunities in markets with a sound basis that may arise with a marked and lasting upturn in European consumption.

HEALTHCARE: Health infrastructure plays an important role for any population and constitutes a social challenge in Europe for years to come. There is a pressing need to renovate the stock of nursing homes, as is the need to boost the supply (clinics, nursing homes, specialised establishments, etc) in all eurozone countries. This will call for very significant investment that will have to be made by the public and private sectors, especially since demographic pressure – regardless of viral threats, which do not modify demographic balances – will remain strong between now and 2025 and will continue to intensify over the following decade. We think that the obsolete part of the nursing home stock and the lack of supply in the market will continue to whet investor appetite for newer, well-localised sites with a sound operator. Consequently, the sector’s ability to deliver long-term capital performance and secure income is well oriented at the euro-zone level.

Investment principles & strategy

In a rapidly changing environment, collective real estate offers investors recurring income and exposure to long-term trends. Our pan-European approach, combined with a strong track record in the structuring and execution of complex real estate transactions, gives us special access to the market so that we can identify the best investment opportunities.

  • Generating long-term performance: we mainly invest in core and core plus assets for our clients
  • Applying conviction-based management: our approach is based on the asset managers’ convictions for the various real estate sectors
  • Managing a diversified and resilient asset base: the main objective of the asset management-based, multi-asset class real estate allocation, combined with significant geographic diversification is to offer investors a resilient risk/ reward ratio.
  • Taking a selective approach: our selection criteria include the quality of the location, building efficiency, the ESG performance of the assets and the solvency and the reliability of the current tenants.
  • Multiplying our expertise: a multi local presence to structure high performance transactions.

Performance verification

The performance of some of our funds and assets is compiled, calculated and verified by MSCI.

COMPLIANCE STATEMENT

Each of our entities has a designated compliance officer. All regulated issues are subject to compliance approval. The Data Protection Officer of Primonial REIM supervises and ensures all entities are compliant regarding the GDPR issues.

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