SEB Investment GmbH
Barbara Knoflach - SEB
"We’re a large healthcare player in France and would like to expand into the healthcare sector in Germany. We haven’t done any deals yet but we are looking."
BNP Paribas Real Estate Investment Management (BNP Paribas REIM) had a record fundraising year in 2018, pulling in €3.8b, of which €1.6bn was in new cash with an additional€2.2bn in separate accounts/mandates.
At the end of the year, the group managed €28.7b of assets in Europe, broken down by
offices (63 %), retail (14 %), residential (9 %), mixed buildings (5 %), and other asset classes such as technical, healthcare, hotel and leisure (9 %).
Here, Barbara Knoflach, global head of BNP Paribas REIM, tells REFIRE why the group is homing in on Germany and why she thinks last mile delivery is shaping up to be the new megatrend in the retail space.
REFIRE: Germany, along with France, is one of your key markets. What are your investment plans there this year?
Knoflach: Last year, we invested €1.5b in Germany and would like to do the same deal volume again this year but the market is very competitive. On the office side, we don’t just invest in Germany’s ‘Big 5’; we also invest in cities such as Mainz and Cologne – the top 15 cities, really. The criteria are not just size but also growth prospects. We’re interested in cities that are becoming ‘smart’ cities. Retail is not at the centre of our focus. The transaction volume in Germany has improved but everyone is searching for yield and trying to find a new source of yield.
REFIRE: Which sectors would you like to up your exposure to this year?
Knoflach: We’re a large healthcare player in France and would like to expand into the healthcare sector in Germany. We haven’t done any deals yet but we are looking. We do have a little bit of exposure to senior housing, though, but would like to have more. We’re very interested in the connection to mega trends, particularly ageing societies, which is why we’re looking at healthcare more than student housing. We’re also interested in the technological aspect. However, we’re not looking heavily looking at data centres but, rather, at logistics because we expect last mile delivery to grow. In Japan, for example, there are a lot of last mile delivery spaces springing up in or close to city centres in order to offer one hour delivery and I think we will start to see that emerge more in Europe, too.
REFIRE: How much would you like to invest across Europe this year?
Knoflach: Last year was a record fundraising year for us; we’re hitting our growth path. Our transaction volume was €4.5b, of which €3.1b was in acquisitions. We anticipate doing a similar deal volume this year. We don’t see any big clouds over the markets, they are still robust, and I think most countries have already priced in Brexit. Of the €1.6b in new cash we raised last year, €800m is in retail funds and the remaining €800m is in institutional funds. It is all invested in core/core plus funds.
REFIRE: You’ve just raised €200m for your Eurozone logistics fund. What are your goals for the fund?
Knoflach: We are in the process of acquiring the fifth asset for our Eurozone Logistics Fund (ELF) in Germany, where around 65% of the fund is invested. It’s a closed-end fund, which we expect to close to new investment later this year. We’ll continue our success story by launching an open-ended European logistics fund for institutional investors later this year.
REFIRE: Will you invest more in German resi this year?
Knoflach: We will see what we can find. We could look at army barracks, for example, with a view to conversion. In Wiesbaden a couple of years ago, a former barracks was converted into very beautiful townhouses but competition for assets like this is pretty high. We also want to increase our exposure to the residential market, which currently makes up 9% of our portfolio. We’d like to invest more in multi-family development in France that we would then rent out. In Italy, we are converting offices into resi as well. (ssk)