Schroder Real Estate Investment Management (Europe)

2017 Real Estate Top 100 ranking: 56http://www.schroders.com/realestate

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Manager Details

Schroders

Corporate overview

Schroders has managed real estate funds since 1971 and currently has £15bn* (€17bn/$20bn) of gross real estate assets under management (at 30 June 2018).

Schroders has built a reputation in the market as an industry leader in developing and managing pooled real estate funds and listed real estate funds. We manage a broad range of open and closed ended direct real estate funds offering investors exposure to both diversified and sector-focused portfolios and differing risk-and-return profiles. Investors can choose between single-country funds and regional funds. We also manage separate account mandates and provide joint venture opportunities across Europe.

Our real estate capital partners team has managed separate accounts and pooled funds since 1997. Our real estate securities team provides investors with exposure to global real estate markets through investing in REITs and other listed real estate companies around the world.

Over 180 people are involved in the management of real estate at Schroders, with offices across Europe, Asia and the United States. The teams are experienced in real estate management, research and strategy, investor relations, finance and administration.

Source: Schroders at 30 June 2018

* Real estate AUM includes holdings of Schroder Real Estate Capital Partners and Schroders Multi-asset Funds.

Sector forecasts

INDUSTRIAL: We expect that UK industrial rental growth will slow to 2–3% p.a. over the next couple of years, because of an increase in the development of large warehouses and because some second-hand space will come back to the market from failed retailers. More over, advances in artificial intelligence and predictive ordering should enable occupiers to start using their warehouse space more efficiently.

OFFICE: We expect UK offices rents to remain steady. Outside of the City of London, development in most cities has already peaked and completions over the next two years should be lower than in 2016–17. Higher residential prices and the relaxation of planning controls in 2013 means that many towns and cities are losing both office and industrial space. Over 14 million square feet of offices in England were converted to residential in 2016–17, equal to the office stock of Newcastle. While office rents in the City of London could fall by 10% through 2018–20, we expect that rents in the West End and in those areas benefiting from new transport links and structural change (eg, Crossrail stations, Shoreditch) to be more resilient.

RESIDENTIAL: We are cautious of the private residential market given the low level of yields in the sector and the fact that capital values are vulnerable to a fall in house prices. It is also possible that a Labour government would introduce controls on private residential rents. RETAIL: UK retail values are falling with an increasing number of retailers and restaurant chains falling into insolvency or entering into company voluntary arrangements (CVAs) in order to cut their rent. In addition, a number of profitable retailers have announced store closures. At root this malaise reflects an oversupply of similar formats (eg, mid-market Italian restaurants, pound shops) and the success of online retailers, which have lower overheads than conventional retailers and a much better insight into their customers. The impact is that retail rents in the majority of locations are likely to fall over the next couple of years.

OTHER: While long-term structural changes means that sectors like student accommodation, or nursing homes may look attractive, it is vital to understand the business models of occupiers and to take into account the risks of changes in regulations and lower liquidity. We currently have investments in data centres, doctors’ surgeries, hotels, nursing homes with private pay residents, self-storage and serviced accommodation.

Investment principles & strategy

Schroders has a disciplined approach to real estate investment. Our strategy focuses on research-led investment within ‘winning cities and centres’.

A small number of larger, ‘winning ’ centres are increasingly capturing a disproportionate share of human and financial capital. Winning centres are those with diversified local economies, sustainable occupational demand and low levels of supply.

Mega themes of rapid urbanisation, demographics and technology are driving structural changes in real estate. Schroders’ research and active management informs its strategies, ensuring enduring appeal for real estate with the potential for rental growth.

Schroders invests in assets that meet occupier needs, offer opportunities to maximise rental potential and minimise the adverse impact of obsolescence and vacancies. Each asset is managed in accordance with its individual business plan. The business plan is the focal point for identifying and implementing the active management strategies that will maximise returns. This approach has been key for driving outperformance.

Portfolio risk and investment performance is monitored by separate fund committees and via Schroders’ Group Investment Risk Framework. All investment decisions are subject to investment committee ratification. Investment strategy, portfolio construction and individual asset plans are regularly reviewed, along with legislative and environmental investment considerations.

Strategic corporate development

We are able to offer our client base a range of investment options including funds, separate account strategies, and large single asset/portfolio opportunities (JVs).

COMPLIANCE STATEMENT

Information is provided at 30 June 2018.

This document does not constitute an offer or form part of an offer to buy units in any of Schroders’ real estate funds. The information and opinions contained in this document have been obtained from sources we consider to be reliable. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Schroders has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Reliance should not be placed on the views and information in the document when taking individual, investment and/or strategic decisions.

Past performance is not a guide to future performance. The value of investments can go down as well as up and is not guaranteed. Any forecasts in this document should not be relied upon, are not guaranteed and are provided only as at the date of issue. Our forecasts are based on our own assumptions which may change. We accept no responsibility for any errors of fact or opinion and assume no obligation to provide you with any changes to our assumptions or forecasts. Forecasts and assumptions may be affected by external economic or other factors.

Units in property unit trusts and limited partnerships, that are unauthorised collective investment schemes, are not readily realisable and there is not a recognized market for such investments. It may be difficult for the investor to deal in such investments or for the investor to obtain reliable information about their value or the extent of the risks to which they are exposed. The funds referred to above are invested in real estate, the value of which is generally a matter of a valuer’s opinion.

Schroder Real Estate Investment Management Limited, 1 London Wall Place, London EC2Y 5AU, United Kingdom. Registration No. 1188240 England. Authorised and regulated by the Financial Conduct Authority.

News from Schroder Real Estate Investment Management (Europe)

View more News from Schroder Real Estate Investment Management (Europe)

News from IPE Real Assets

View more News from IPE Real Assets

White Papers / Research from Schroder Real Estate Investment Management (Europe)

  • UK real estate market commentary: June 2017

    The sharp depreciation in sterling since last year’s Brexit vote has pushed up inflation to almost 3% and cut real incomes and consumer spending. While a lower exchange rate ought to boost exports, UK exports have so far been flat, possibly because foreign buyers are concerned about future tariffs. 

  • Continental European real estate market commentary: June 2017

    The eurozone economy appears to have entered a more robust recovery cycle, as faster growth leads to stronger investment. While Emmanuel Macron’s election as French president has improved business confidence across the region, the key to increasing investment has been the steady fall in industrial spare capacity since 2013 combined with low interest rates. 

  • UK real estate market commentary: March 2017

    The vote to leave the EU has generated different responses from UK business and consumers. Despite the Bank of England’s cut in interest rates and other measures, business investment fell in 2016 and companies have become more cautious about recruitment. 

  • Continental European real estate market commentary: March 2017

    The vote to leave the EU has generated different responses from UK business and consumers. Despite the Bank of England’s cut in interest rates and other measures, business investment fell in 2016 and companies have become more cautious about recruitment. 

  • UK real estate market commentary: December 2016

    Although the UK economy performed better than expected in the six months following the EU referendum, it was very dependent on consumer spending. Turning to this year, consumption is likely to lose momentum, as inflation overtakes annual wage awards. 

View more White Papers / Research from Schroder Real Estate Investment Management (Europe)

Analysis from IPE Real Assets

  • Investor Forum: Agree to disagree

    Listed REITs can mirror direct investments, but do they they belong in property portfolios? Rachel Fixsen talks to six investors and advisers

  • Office Europe: Mixed fortunes

    Six months after the Brexit vote, the prognosis for the UK’s office sector is still unclear, writes Russell Handy

  • Switzerland: Beyond the cantons

    Swiss investors are earmarking more money for foreign real estate – but opportunities are becoming scarce. Barbara Ottawa reports

  • Leisure: Catching the UK consumer

    The UK leisure sector has performed strongly as a result of changing cultural behaviour and improving fundamentals, writes Maha Khan Phillips 

  • Portfolio De-Risking: Still a role to play

    The growing phenomenon of ‘de-risking’ among UK pension funds has often implied a broad move out of risk assets. But Alistair Jones and Mark Callender ask whether property should be spared

View more Analysis from IPE Real Assets

Head Office
31 Gresham Street
London
EC2V 7QA
United Kingdom
Contact
Tom Dorey Tel. +44 20 7658 3020

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What’s new

  • uk real estate market commentary june 2017

    UK real estate market commentary: June 2017

    White papersWed, 19 Jul 2017

    The sharp depreciation in sterling since last year’s Brexit vote has pushed up inflation to almost 3% and cut real incomes and consumer spending. While a lower exchange rate ought to boost exports, UK exports have so far been flat, possibly because foreign buyers are concerned about future tariffs. 

  • continental european real estate market commentary june 2017

    Continental European real estate market commentary: June 2017

    White papersWed, 19 Jul 2017

    The eurozone economy appears to have entered a more robust recovery cycle, as faster growth leads to stronger investment. While Emmanuel Macron’s election as French president has improved business confidence across the region, the key to increasing investment has been the steady fall in industrial spare capacity since 2013 combined with low interest rates. 

  • UK real estate market commentary: March 2017

    White papersMon, 3 Jul 2017

    The vote to leave the EU has generated different responses from UK business and consumers. Despite the Bank of England’s cut in interest rates and other measures, business investment fell in 2016 and companies have become more cautious about recruitment. 

  • Continental European real estate market commentary: March 2017

    White papersMon, 3 Jul 2017

    The vote to leave the EU has generated different responses from UK business and consumers. Despite the Bank of England’s cut in interest rates and other measures, business investment fell in 2016 and companies have become more cautious about recruitment. 

  • uk real estate market commentary december 2016

    UK real estate market commentary: December 2016

    White papersMon, 2 Jan 2017

    Although the UK economy performed better than expected in the six months following the EU referendum, it was very dependent on consumer spending. Turning to this year, consumption is likely to lose momentum, as inflation overtakes annual wage awards. 

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