What is GWM active in at the moment?
We manage closed and open-ended regulated investment vehicles in a number of different strategies. We are active in the traditional long /short debt and equity strategies and have a focus on illiquid investments, including real estate. We also own a substantial renewable energy business through a controlling stake in a company listed on the Danish Stock Exchange. Our clients include large private as well as institutional investors.
Within the real estate sector we have an allocation of roughly €600 million, which is partially deployed and partially still to be invested. The capital is managed mainly through open-ended funds, which means we do not necessarily need to return the capital to the investors once we monetize, but can redeploy the capital in new investments. We invest at different levels in the capital structure of real estate assets/companies, and try to select the investment that maximizes our risk-weighted returns. We take minority as well as majority positions, joint ventures, and we have taken positions in listed vehicles with a long-term approach.
In the past we have invested in various asset classes, such as hospitals, office developments, sale and leaseback transactions, which we are very fond of, and retail.
Could you elaborate more on which parts of the world you have been the most active so far and where you would like to expand in the near future?
We have been active in Italy, the UK and marginally in Germany. We are looking at the US as well, but mostly in the junior debt segment. Ideally we would like to invest more in Germany and France, as well as expanding our retail investment strategy in Italy, where we have recently bought the largest Italian retail park, the Market Central Da Vinci.
Our target for the next two-three years is to build up a retail portfolio of between €500 million and €1 billion. We would invest selectively in development projects, albeit our preference falls on assets that are let and need some asset management, especially in cases where the current owners have under-invested in the properties since the beginning of the financial crisis in 2008. Essentially what we are looking for are properties that are well-established but that are in need of “love and care”.
Where do you see the most opportunities in the coming years?
We are very keen on the real estate debt sector. We have been active in mezzanine/junior debt and are structuring a senior debt fund which we hope to be able to launch in early 2014. We see a lot of opportunities in debt throughout Europe. In some countries spreads have already come down but in some secondary, and especially southern European countries, such as Spain and Italy, the spreads are still very wide and there could be very interesting opportunities in senior whole loans or possibly stretched senior.
We believe that we have a special angle - especially in Italy - given our team’s unique experience and our intimate knowledge of the market, its players and peculiarities. In southern Europe, we increasingly see some of the stress in the banking sector being passed through to the sponsors, and some sponsors taking decisions that can lead to appealing investment opportunities for investors with a longer-term investment horizon.
In which sector do you see the best opportunities in the near future?
I would not talk about opportunities for growth in any specific sector. I would rather look for defensive assets that can be bought – at this point in the cycle - at the right price and that therefore would withhold a potential deterioration or stagnation of the economic situation and possibly, in the long run, provide for capital appreciation. We do not think that recovery in Europe is going to happen anytime soon so we are confident that the appropriate real estate is going to be a defensive play and can offer very interesting risk adjusted returns. We are focusing on debt as there is a great scarcity of debt capital in the real estate sector and there are going to be substantial refinancing requirements in the coming years. There is a big gap to fill.