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The European real estate market entered the year with continued nervousness around where interest rates would settle and evidence that transaction volumes in 2022 were significantly down. Investors have been readying themselves to pounce on stressed sales as loans mature and need to be refinanced at far greater cost. The “cautious optimism” of the early months of this year was tempered by the need to rescue SVB by the US government and the acquisition of Credit Suisse at the end of Q1, leaving some principal investors anticipating further bad news in the months ahead.
Logistics, life sciences and the living sectors (including hospitality) remain investible asset classes as the future of the office sector remains uncertain and retail still shows no signs of recovery. Capital raising has remained a focus with Asia and the Middle East being heavily targeted, especially for value-add strategies given the higher cost of debt.
The pricing correction across the region continues, with the UK having cut earlier and deeper than continental Europe. Notwithstanding, year on year UK transactions in Q1 2023 were down 59%. The bid/ask spread for European real estate remains stubbornly wide, but recent refinancing transactions suggest debt pricing is beginning to stabilize. For those repositioning assets or developing, news of a return of competitive tension among construction companies is welcome.
The general consensus is that transaction activity will begin to return in Q3 and Q4 this year and meanwhile companies are making cautious strategic hires to strengthen teams to fit their growth plans.
September highlights:
Key Transactions
- In a deal valued at €1.35 billion, Davidson Kempner Capital Management is selling Italian real estate asset management and credit servicing firm Prelios to X3 Group, a subsidiary of ION.
- Slate Asset Management reached agreement on the acquisition of X+bricks Group’s grocery-anchored real estate portfolio in Germany valued at c.€1 billion.
- CapitaLand Ascott Trust acquired The Temple Bar Hotel in Dublin and The Cavendish in London for £275 million.
- NREP completed the acquisition of an 80% stake in 7R, one of the largest logistics property developers in Poland, investing c.€200 million.
- Having previously acquired a majority stake, Arrow Global acquired 100% of Maslow Capital, expanding their direct real estate lending capabilities in the UK and Europe.
People Moves
- Henk-Dirk de Haan has been appointed Chief Financial & Risk Officer at Bouwinvest Real Estate Investors, effective 1st October.
- Savills appointed Stuart Jordan as CEO of Central and Eastern Europe.
- Asoka Wöhrmann began his role as CEO at Patrizia.
- Delin Property board member Tom Wattles as CEO.
- Klaus Schmit took over as interim CEO at Domicil Real Estate.
Industry Trends and Events
- Aareal Bank has completed the funding of a senior loan to refinance a portfolio of three assets in Central London for the Chapter joint venture.
- Harrison Street is seeking to raise €1.5 billion for its fourth European alternative real estate fund.
- Patrizia reported a 2.1% annual drop of assets under management in H2 2023 to €57.9 billion.
- Ilke Homes collapsed owing c.£320 million to creditors.
- According to research by Savills, available stock in London’s West End has topped £4 billion, the highest figure so far this year.
New from Ferguson Partners Europe
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PGIM President and Chief Executive Officer Eric Adler on critical leadership attributes and the evolving investment management space.
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Landsec Chief Executive Officer Mark Allan on key leadership qualities for today's changing world and challenges facing the next generation of leaders.
Neil Slater, Global Head of Real Assets for abrdn on leadership best practices, the role of ESG in strategy, culture and success.
Frasers' Property Chief Executive Officer Ilaria del Beato on leadership success, ESG leadership and the future outlook.
Schroder's Capital Global Head of Real Estate Sophie van Oosterom on leadership, culture and the future of work.
Ferguson Partners Europe Activities
Keep up with our team.
FP Industry Leaders Breakfast
Ferguson Partners CEO Gemma Burgess, Chairman William J. Ferguson, and Head of Europe, Charlie Barton, hosted a CEO breakfast to facilitate a conversation between industry leaders. Thank you to those who participated and shared their insights.
Bisnow DEI Event: Attracting, Promoting, Retaining
Ferguson Partners' Priya Mehra recently attended Bisnow’s Rise UK Initiative Elevating Diversity within Commercial Real Estate, where some of the biggest CRE companies demonstrated successful and measurable DEI results, attracting, promoting and retaining diverse teams.
FP Attends Houses of Parliament DEI Event
In commemoration of South Asian Heritage Month, the Ferguson Partners team joined a special event, part of a DEI series, from the City Hindus Network and City Sikhs at the Houses of Parliament.
