CBRE Investment Management [Real Estate - Europe]

Corporate overview 

CBRE Investment Management is a leading global real assets investment management firm with $142.5bn in assets under management* as of 30 June 2024, operating in more than 30 offices in 20 countries around the world. Through its investor-operator culture, the firm seeks to deliver sustainable investment solutions across real assets categories, geographies, risk profiles and execution formats so that its clients, people and communities thrive.

Investment principles & strategy

CBRE Investment Management’s investment philosophy is to deliver superior performance by applying the firm’s knowledge advantage through a disciplined investment process. The firm’s investment philosophy is founded on the following principles: 

Risk must be understood before it can be managed 

• A rigorous risk framework for each mandate is formulated and then portfolios that will meet the firm’s clients’ risk/return requirements are carefully constructed. 

Market conditions change 

• By combining a global view of capital markets with an in-depth insight into local asset fundamentals, the firm invests in the markets and strategies that offer the best relative value at different stages of the cycle.

Every asset is unique 

• The firm utilises its local information networks to understand the drivers and risks of the future cash flow of an asset, enabling the ability to see opportunities where others do not, and to be a disciplined seller. 

Asset management creates value 

• A deeper understanding of occupier requirements enables the firm to maximise each asset’s potential through innovative and sustainable management. 

Consistency counts over the long run 

• A superior investment track record is built through consistent outperformance across cycles. 

The firm offers a range of strategies across the risk-return spectrum.

Sector forecasts

INDUSTRIAL: 

Our logistics total return forecasts by market are closely clustered. German, French and Benelux core markets screen as most attractive on a risk-adjusted basis. Our residential return forecasts are lower than logistics, but also generally have lower required returns. The RARE analysis points to attractive residential opportunities across a broad selection of European markets. 

OFFICE: 

Offices, both modern and legacy, sit towards the bottom of the total return forecast hierarchy. The spread in the outlook between the two segments is stark. While modern offices are set to record positive modest and back-loaded capital growth over the forecast period, legacy offices are expected to see a cumulative capital value decline of approximately 20%. Legacy office returns are also held back by high capex requirements.

RESIDENTIAL: 

The continued resilience of occupier markets along with the improving economic backdrop underpins our robust outlook for rent growth over the coming five years. In aggregate, we expect European prime real estate to generate rent growth of 2.5% per annum over the forecast period (chart below). 

Market rent growth, % Y-o-Y, average

There is no sign of demand easing in the residential sector, nor is there any prospect of supply increasing in the short term. Residential building permits across the eurozone have declined almost 20% over the past year (?Figure 4?). We believe that the clear structural undersupply of quality residential stock across Europe will persist. The sector has the strongest rental growth outlook, at 2.9% pa, in our latest forecasts. Demand has been boosted by the rapid increase in interest rates, acting to restrict access to mortgage finance and keeping some households in rented accommodation for longer than expected. Affordability and increased regulation are headwinds in some markets, but only

RETAIL: 

In the retail sector, significant asset-level variation is nothing new. Malls have seen a huge divergence in performance since e-commerce began to pressure physical retail sales in the last decade. Post-pandemic, we have seen office demand focused more than ever on best-in-class space, which drives our expectation of prime rent growth. Outside of this top slice of the office market, however, much of the existing office stock will require varying levels of repositioning to remain relevant.

Strategic corporate development

CBRE Investment Management seeks to be a leader in global real assets investment management by consistently delivering outstanding performance and exceptional client solutions. The firm continues to bolster its existing global platform and grow purposefully over time. In particular, the firm is focused on growing the following programs over the next three to five years in alignment with investor appetite and objectives: 

• Open-end, diversified core real estate funds in the US and Europe 
• Open-end, diversified global core-plus funds in real estate and infrastructure 
• Open-end, sector-specific core-plus funds in logistics and residential in the US and Europe 
• Closed-end, enhanced return real estate fund series in the US, Europe and APAC, plus a global opportunistic secondaries fund series 
• Listed real assets strategies across real estate and infrastructure 
• A select number of premier separate accounts across asset classes, regions and/or execution formats.  

CBRE Investment Management does not place absolute limits on growth in any of the above areas, with the exception of selective hard ceilings on closed-end funds based on overall capacity of the investment opportunity. In general, the firm would limit growth if the expected high level of performance or service could not be provided or when growth would jeopardise the performance of existing investments. We do not foresee any potential conflict of interest that could arise from managing this particular account.

We do not foresee any potential conflict of interest that could arise from managing this particular account. 

_{COMPLIANCE STATEMENT}

_{Senior management of CBRE Investment Management is responsible for ensuring compliance with a code of ethics, regulatory requirements, and fiduciary obligations.}

_{CBRE Investment Management is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. It also is authorized and regulated in certain European and Asian countries to undertake certain regulated activities in conjunction with its investment advisory and fund management services.}

_{The firm has designated compliance officers across the regions and has adopted, implemented, and provided for reviews of adequacy and effectiveness of its written policies and procedures.}

_{All employees are required to comply with the Investment Management Policies and Procedures, which include legal and compliance policies.}