Generali Real Estate

2017 Real Estate Top 100 ranking: 36

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Manager Details

Corporate overview

Generali Real Estate is one of the biggest real estate investors in the world, with €29bn of assets under management at the end of June 2018.

Following a long-term investment horizon and leveraging on a team of 450 professionals, with operating units located in the main European cities, Generali Real Estate coordinates the Generali Group’s real estate portfolio across the globe, and makes use of its well grounded expertise to promote investment products for third-party clients, while Generali Real Estate SGR is the fund management company in charge of real estate funds, both reserved to the Generali Group companies and third parties.

By managing a unique portfolio in terms of asset quality and mix of historical and modern buildings, Generali Real Estate has developed best-in-class skills in the fields of technological innovation, sustainability and urban development.

The Generali Group is one of the world’s leading insurance companies, founded in Trieste, Italy, in 1831. It is present in more than 60 countries, with over €68bn of revenue in 2017.

Sector forecasts

Office: After a record year in 2017, the European commercial property investment market lost some momentum in the first half of 2018 but remained at a strong level compared to historical standards. The UK and Germany witnessed a slight fall in investments in H1 2018, while France recorded a strong increase, as well as the Benelux, Ireland, Portugal, Poland and Finland. In terms of pricing, the general trend is a stabilisation in European prime office yields, with a few markets like Frankfurt, Vienna, Helsinki and Warsaw continuing to record some yield compression.

Amid slowing GDP growth and political uncertainty, overall European office occupier demand remained robust with 3.4m sqm taken, while the downward trend in the aggregate office vacancy continued, reaching 6.7% in Q2 2018 (–30 basis points quarter on quarter). On the back of that, rental growth in the European office sector remained positive, with Berlin and Frankfurt amongst the top performers in terms of annual growth, as well as Stockholm, Oslo, Budapest and a few Southern European markets like Barcelona, Milan and Lisbon.

With economic forecasts still pointing to healthy growth overall in 2018 and 2019, we expect property income streams to benefit from sustained demand and more generous indexation amid continued decline in vacancy rates during next quarters. In this context, Benelux, Nordics, Paris La Défense, Prague and Budapest should offer the most attractive prospects in terms of relative value.

Looking ahead, the continuous development of co-working and data mining should impact the office market and require more attention from the landlords, in order to secure and analyse critical tenants and premises info-flows, and deliver on the promise of big data exploration and tenant oriented approach.

Retail: The retail industry has entered a period of unprecedented innovation and disruption that challenges retailers’ and investors’ business models.

US retail bankruptcy and store closings have been a cause of concern and anxiety for European operators and investors, but it should be borne in mind that retail space density in the US is out of proportion with the European market standards. In addition, obsolescent department stores were typical anchor tenants in many American shopping centres.

Nevertheless, the competition from online shopping and discounters poses serious and imminent threats to retail premises in Europe. This said, the improvement of buying experience and the increasingly sophisticated use of data and technology should significantly increase the attractiveness of brick and mortar retail in shopping centres and high-street retail.

In this challenging environment, we are focused on dominant downtown shopping centres and prime high-street retail shops in Central and Eastern Europe, Nordic countries and Ireland, whose markets are expected to outperform. Moving up the risk curve, Moscow and Athens could also be considered.

Investment principles & strategy

Generali Real Estate manages Generali’s real estate portfolio worldwide and is responsible for the implementation of the group’s real estate strategy. The company carries out research-based portfolio optimisation and diversification across geographies, asset classes and risk profiles.

The main appetite is for investing in core and core-plus assets in the largest European cities, as well as in Asia and North America, with a focus on prime office buildings, high-street retail and other retail space. Generali Real Estate uses a disciplined risk-return based investment and divestiture process to maintain a high-quality portfolio.

Strategic corporate development

In the next few years, Generali Real Estate expects to continue to invest and grow significantly its portfolio under management, leveraging on the new pan-European dimension of its fund management company, on the strong experience and market knowledge of its local teams, and on a highly effective portfolio strategy based on a thorough research-driven investment selection and sector monitoring.

Furthermore, the company will keep strengthening its fund management business, establishing new products and strategies in partnership with selected third-party investors.

Performance verification

Generali Real Estate periodically evaluates its performance against a number of benchmarks, according to best market practices. The performance of each fund is measured and analysed by independent third parties on a regular basis.

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Via Nicolò Machiavelli 4

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