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realasset
Issue 11 | July 2021
INSIGHT
THE WINDS
OF CHANGE
INFRASTRUCTURE
Real Asset Insight | Issue 11 | July 2021
SPECIAL:
How renewable energy
has become a compelling
proposition for investors
SPECIAL REPORT Poland’s Olivia Business Centre Insight & Strategy France l European H2 Outlook
Residential l Affordable Cities l Retail l Debt Financing l Student Housing l Plus People & Moves
Impact investing since 1984
Scan here to
find out more
The power to create Together, Julia, Mahdi and Marcelo see
things others don’t. Leading PATRIZIA’s
a better tomorrow
Investment Strategy and Research team,
they use big data to deliver long-term value
– and a more sustainable future for all.
See how we use big data to make a positive impact at The information contained herein is directed only at professional clients and intended solely for use by the recipient. No part of this document or the information herein may be distributed,
copied or reproduced in any manner, in whole or in part, without our prior written consent. This document is for information and illustrative purposes only. It does not constitute advice, a
patrizia.ag/tomorrow
recommendation, or a solicitation of an offer to buy or sell shares or other interests, financial instruments or the underlying assets, nor does this document contain any commitment by
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provide no warranty or guarantee in relation to the information provided herein and accept no liability for any loss or damage of any kind whatsoever relating to this material. The information
herein is subject to change without notice. April 2021 PATRIZIA AG
realasset
2 0P
-2 INSIGHT
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4
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Infrastructure leads new
Front cover image: AdobeStock/Inna
era of ‘green’ investing
W
elcome to the July 2021 edition of market information (page 26). While the world
Real Asset Insight. In this issue we has endured a serious health crisis,
include a focus on the infrastructure it has not been a financial crisis, points out
aspects of real assets which are coming to the Patrizia Immobilien chief urban economist
fore, in part, because of a number of largely Marcus Cieleback.
Managing Editor environmentally dictated trends, not least the
Paul Strohm growing need for green power generation. Even the retail sector, largely written off
paul.strohm@ in some quarters, is set for some sort of
realassetmedia.com
Historically, if you said ‘infrastructure’ it resurgence as consumers emerge from
News Editor Nicol Dynes would tend to imply roads, rail and a host of pandemic lockdowns. While the challenges
nicol.dynes@
other large and expensive civil engineering- that still lie ahead for retail are not to be
realassetmedia.com
led assets that were viewed as probably underestimated and the sector is expected to
Design and Production unprofitable and certainly the responsibility of settle at below its pre-pandemic levels, even
Lucien Howlett
the public sector. Now, the clamour for green non-food retail is expected to grow by an
lucien.howlett@
realassetmedia.com energy, among other things, plus investors’ average 5.5% across the EU-27 (page 34).
desire for a broader spectrum of opportunities
Director Client Relations
has expanded that definition and opened up This summer, two sectors in particular are
Frank Beinborn
Join us for the frank.beinborn@ the market for a wider range of participants. ready to gauge the implications of the eased
realassetmedia.com The sector also has the benefit that creation restrictions. Despite the positive news, the
+49 152 54 87 86 68 of these assets generally chimes with hospitality sector may have to wait until 2022
EPRA 2021
Managing Partner investors’ ESG aspirations. before any improvement is felt, let alone a
Thorsten Herbert return to pre-pandemic levels. Meanwhile there
thorsten.herbert@ As PwC found (page 14), infrastructure assets is more optimism among investors in student
Conference
realassetmedia.com under management are expected to double to accommodation.
+49 170 47 98 793
more than $2 trillion by 2025, so the potential
Group Publisher is enormous. As International Campus Group executive
Richard Betts chairman Rainer Nonnengässer points out
richard.betts@
realassetmedia.com
THE NEW INFRASTRUCTURE (page 54), his company has allocated €1 billion
+44 (0) 755 7373 134 In the infrastructure section (page 19), we for expansion over the next two years in its key
LORD KING MEIK WIKING report how Commerz Real’s Klimavest fund Northern European markets. Travel restrictions
European Real Estate For the www.realassetinsight.com
realassetlive.com
is investing in both large-scale solar and
wind generation of electricity. And we see
may have reduced lettings to international
students over the past year and a half, but
Future: Wellbeing Strategies www.realassetmedia.com
Investment Briefings Ltd
how the switch to electric vehicles is another
example of the environment-led changes that
they have also restrained the competition from
international investors, leaving a clearer path
and Opportunities in the Post 10 Jesus Lane
Cambridge, CB6 8BA
also precipitate demand for a new style of for Europe-domiciled investors, such as IC
infrastructure. Group, to expand.
Pandemic World VAT: 202 8685 13
Copyright © 2021 Real Asset Media Infrastructure may be a relatively emerging Paul Strohm
All rights reserved. No part of this publication aspect of real assets in the nearly post- Managing editor
may be reproduced, transmitted in any form pandemic world, but more traditional property
or by any means, electronic or mechanical
SANDEEP CARLO RATTI including photocopy, recording or any
segments of the real asset sector are
beginning to feel their way forward for the
MATHRANI information storage and retrieval system,
without prior written permission. second half of the year, it seems.
“We see signs of normalisation and all the data
#EPRAconf coming through is reassuring,” points out Irina
Pylypchuk, INREV’s director of research and
realasset
MEDIA
Issue 11 July 2021 | Real Asset Insight 3
Contents
INTRODUCTION 34 Retail Recovery
43 SPECIAL REPORT -
6 Industry Insight
14 A two-paced recovery is emerging where consumers in some
countries are ready to spend again, while others remain circumspect OFFICE OF THE FUTURE
Industry leaders continue to debate key real estate issues
and themes on the REALX.Global virtual platform 38 Logistics Olivia Business Centre
The star sector of the pandemic is preparing for permant change, but The complex in Gdansk, Poland, is an
8-9 News how can it maintain the momentum of the past 12 months? exemplar of how offices and employee
well being can work hand in hand
ESG helps smaller cities climb resilience index, ‘Urban campus’ to
regenerate Rome station, CEE hotels begin road to recovery 40 Debt Finance
Private debt has stepped in to fill funding gaps as banks have
retrenched on lending in the past year
INFRASTRUCTURE SPECIAL 51 Student Housing
10 The winds of change in energy
H2 Outlook
Students signalling a readiness to return to campus is a boost
Green energy generation, driven by economics and regulation, for the purpose-built student accommodation (PBSA) sector
is now a priority for investors and companies alike
14 Diverse assets and resilience SPECIAL SECTION
Stable returns in times of crisis and huge amounts of state
investment make infrastructure hard to ignore for investors Senior Housing & Healthcare
18 Infrastructure news 56-59 News & Insight
Care homes remain attractive to investors, despite Europe-wide
26
Commerz Real acquires Finnish asset for impact fund; European
bus charging rollout; BlackRock raises $1.67bn for infra debt fund complexities. Plus: Data highlights compelling senior care case,
Moorfield/Allegra JV in first deal, Europa moves into senior living
INSIGHT & STRATEGY
20 France THOUGHT LEADERS
International investors, who have been prevented from doing deals
in France due to the pandemic, are ready to return in force
54 Rainer Nonnengässer
International Campus executive chairman explains how the student
24 French Logistics accommodation operator plans to expand over the next two years
It’s a market that cannot be ignored despite falling yields, says
Union Investment’s Stephan Riechers
62 Online interviews
34 51
Experts discuss changes to residential and offices post-pandemic, the
26 European Outlook importance of tenant data, and how alternative assets tick ‘social’ box
The pandemic has not had the catastrophic effect on real estate that
was predicted and investors have capital to pile into the sector again
66 Justin Curlow
Global head of research and strategy at AXA IM Alts looks for
29 Residential & Affordable Housing positive outcomes for real estate in a post-pandemic world
With offices and retail out of favour, residential has been seen as a
safe haven during the pandemic PEOPLE
32 Towards Affordable Cities 64 Prof Andrew Baum joins Pi Labs
How the private sector and local authorities can come together Plus all the latest moves and promotions across real estate,
to rebuild cities the next generation will want to live in including Greystar, Patrizia, Hines and Urban Land Institute
38 54
4 Real Asset Insight | Issue 11 July 2021 Issue 11 July 2021 | Real Asset Insight 5
Insight & Strategy - Online briefings
‘There’s more
capital available
as people
realise how well ‘In Europe online
the sector has volume in one
performed. The year has been as
doubts are fading much as in the
away and there is more previous five years
confidence in the asset class.’ combined.’
Industry
Samuel Vetrak, CEO, Bonard Sally Bruer, Partner – Logistics &
Industrial, Insight & Strategy EMEA,
Cushman & Wakefield
insight
‘There will be more
working from home
but it won’t become
the norm.’
Didier Unglik,
REALX.Global’s virtual platform has given an president, L’Etoile
opportunity for industry leaders to continue Properties ‘There is huge
sharing their views on the future of the market demand for
and the sector beyond the pandemic. Here are defensive
products
just a few of their insights. like food retail,
especially in
‘The big picture Northern Europe, but it’s spreading
‘A s an from fund to the south as well.’
investor you managers is Mike Bellhouse, director, head of retail
must create positive. Investors investment international capital, JLL
‘We believe in places where are regaining their
physical retail people want to be, cities are not confidence and there
and we keep just bricks and mortar – they is a lot of capital waiting
expanding with must have a heart and a soul.’ on the sidelines.’
our hypermarkets Anette Simpson, director of
into new areas.’ Iryna Pylypchuk, director of
development & partnerships,
research and market information,
Angelus Bernreuther, L&G Affordable Homes
INREV
head of investor relationship
management, Kaufland Stiftung
6 Real Asset Insight | Issue 11 July 2021 Issue 11 July 2021 | Real Asset Insight 7
Insight & Strategy - News
Berlin Hyp sets Amsterdam has climbed to 17th
on the Resilient Cities Index ‘Urban campus’ wins opportunity to regenerate Rome
sustainability
A
new urban regeneration project will railway land near the centre of Rome It is intended as “a vision for an area of
example at new HQ transform a long-neglected area of into a “campus, not a business park”, the Rome in search of a new identity which
B
Rome, creating a new sustainable group said in a statement, “a truly mixed- bets on the themes of the circular economy,
erlin Hyp’s B-One project – the mixed-use neighbourhood. use neighbourhood” with flexible offices sustainability and the enhancement of
replacement of its headquarters Campo Urbano, or ‘urban campus’, has but also multifunctional spaces, housing, existing buildings”, said the Fresia-led
with a new building – has gained been chosen as the winning project in the student accommodation, retail and labs. consortium. “Functions and services will be
a platinum certificate for ‘Building Reinventing Cities international competition The area will be car free and is inspired integrated and public spaces will relate to
Deconstruction’ from Germany’s to transform the site around Tuscolana by the ‘15-minute city’ model, a private spaces, giving the city a soul.”
sustainable building council (DGNB). railway station in the Italian capital. neighbourhood with all the infrastructure FS, the Italian State railway, owns the
AdobeStock/yasoyma
The project involves the demolition of The Campo Urbano project, created by and amenities needed for people to site and with Roma Capitale, the local
the bank’s office building at Budapester an interdisciplinary team led by Fresia RE, work, live and socialise. It will be a green authority, chose the winning project from
Strasse 1 in Berlin-Tiergarten and a Rome-based real estate management and sustainable area powered by a large number of international entries.
replacing it with 4,800 sq m of space. company, will turn 45,000 sq m of disused renewable energy. The Reinventing Cities competition was
Berlin Hyp achieved an overall organised by the C40 Cities Climate
performance rating of 83.6% in the pre- Leadership group that promotes sustainable
ESG helps smaller cities
certification process and will receive urban regeneration.
the final certificate after demolition has Campo Urbano is also part of the ‘green
been completed. It is only the second ring’, a series of public spaces and new
climb resilience index
project in Germany to receive the DGNB services that run along the railway ring
award for deconstruction. between the Trastevere area and Tiburtina
Berlin Hyp’s management board chair station.
A
Sascha Klaus said that a modern and Tuscolana is the first of five planned
sustainable concept for construction of lthough size and critical mass really Boston following, several smaller European projects to regenerate areas around
the new headquarters is being employed. do matter where cities’ ability to cities with populations under three million disused railway yards in Rome. Similar
“The building will therefore meet the withstand stress is concerned, make it into the top 20. Stockholm is in 12th projects, such as the transformation of
Rome’s Tuscolana railway
highest sustainability standards. Our strengths in other emerging areas, notably position and Amsterdam 17th. the Bovisa and Porta Romana areas, have
station is set to be transformed
project also includes the deconstruction ESG, are fortifying several smaller cities. Savills said these cities tend to score already been launched in Milan.
Savills has published its Resilient Cities highly due to strong ESG credentials and
Index 2021 in which, according to the firm’s knowledge economies, well-educated
CEE hotels begin road to recovery after 2020 pandemic hit
tests, New York, Los Angeles, London, populations and developed tech scenes.
Tokyo and San Francisco are revealed to be The Resilient Cities Index rates cities
F
the top five most resilient cities in the world. using national ESG factors because city-
They have deep and liquid real estate level data is scarce. Thus the Nordic cities igures released by Cushman & that most (87.6%) of the last year’s deal (2016-2020) reached €791 million, which is
markets, meaning they are unlikely to be top this metric, because they score highly Wakefield have revealed just how volume comprised deals struck before the 2.7 times that achieved during the peak of
undermined swiftly by change, the firm said. for use of renewables, food and water hard Central and Eastern Europe’s outbreak of the pandemic. the previous cycle (€296 million, 2002-06).
As part of its 2021 Impacts programme security, natural resources and electric hotel real estate market was damaged by That said, investor activity this year has This reinforces the fact that the overall
Savills assessed 500 cities, with metrics vehicles. Cities in New Zealand and the health crisis in 2020. While there had already reached €140 million in closed fundamentals of CEE’s investment market
centred around four core themes: economic Canada, the only non-European nations in been expectations of transaction volumes deals. And C&W believes the region’s hotel have grown stronger over the years, and
of our old building. We want to serve as fundamentals; knowledge economy and the top 10 for ESG, also score well. reaching €1.8 billion, the reality was market remains robust. The average annual are reflected in the increasing investor
a role model here by setting an example technology; ESG; and real estate. “Our first Savills Resilient Cities Index €370 million among the CEE-6: Bulgaria, transaction volume over the last five years interest and activity in the region, C&W said.
within the real estate sector,” he added. “These metrics determine which cities in 2019 looked at city GDP, private wealth Czech Republic, Hungary, Poland, Romania
Building material is to be recycled or have remained resilient in the face of and demographics, but to reflect changing and Slovakia. Annual transaction volume for hotels in CEE 2005-20 (€ million)
disposed of in sustainable manner and Covid-19 and which cities will continue times we’ve added many other metrics in The figure was 74.2% down on 2019’s 1,500
most small office furniture, materials to evolve to face new market and natural 2021, including ESG,” said Sophie Chick, €1.4 billion, a steeper fall than in the rest of
and equipment that is no longer needed forces,” the firm said in a statement. head of department at Savills World Europe, which dipped 62.8%. Many deals
has been donated or auctioned off with The top five cities continue to harness Research. “While this hasn’t dramatically in the CEE were put on hold or withdrawn,
1,200
Running average (5-year intervals)
Source: Cushman & Wakefield/RCA
proceeds donated to charities. their power as gateway locations, Savills altered the top of the Index what’s and transaction activity almost came to a
The new HQ (pictured above), said. They benefit from a virtuous circle: interesting is that smaller cities are evolving halt because the uncertainty caused by the 900
designed by Denmark’s C.F. Møller large companies are attracted to them, and their strong knowledge economies, pandemic “led many investors to retreat 791
Architects, will be completed in 2023 their business eco systems and large talent talent bases and ESG credentials are to their core markets and focus on familiar
600
and will bring all employees in Berlin bases and that attracts still more talent and allowing them to catch up. ground” C&W said in a statement. 530
together into a single building. fuels strong economic performance and “These smaller cities should continue to One crumb of comfort has been drawn
300 342
The bank is pursuing a ‘very high’ robust real estate markets. rise, alongside locations in China and India, from the fact that the 2020 deals haul was
236
certification from the DGNB for the Although New York, Los Angeles and which will climb as they become wealthier considerably higher than during the Global
completed building. London are at the top of the rankings, with and improve their environments to compete Financial Crisis in 2009 when volumes fell 0
Tokyo, San Francisco, Paris, Seoul and more evenly with global mega-cities.” to €209 million, although C&W points out 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
8 Real Asset Insight | Issue 11 July 2021 Issue 11 July 2021 | Real Asset Insight 9
Insight & Strategy – Infrastructure Summit
Winds of change
blow through
energy sector
Economics and
D
ifferent powerful forces, including
AdobeStock/zentilla
economics and regulation, are driving
regulation are two the greening of energy generation.
reasons why green Agreement on policy is crucial now that Biden’s
US is being constructive on climate change and
Offshore wind is one of the
fastest-growing renewable
energy generation China is serious about reducing emissions.
Meanwhile, the EU has been at the forefront of
energy sources
is now a priority. But green taxonomy and all 27 countries support the
other factors are in energy transition. paths will differ depending on the situation in
each country.
Ciruelos. “The economic headwinds have
been counterbalanced by increasing interest in
‘There is pressure on companies
play as well, reports “The real key is the two parallel drivers working decarbonisation.” from EU and national regulators.
Nicol Dynes
in tandem in the same direction and pushing
for investments into energy transition,” says Jim
“In the UK we’re happy to have a carbon tax,
which is a stick to beat us with, while the US It’s an irreversible path, he adds: “The great
In Germany the pressure is huge.’
Wright, listed infrastructure fund manager at goes for the carrot of a tax credit,” says Wright. news is that for the first time everyone is Sophia Truong, PwC Legal Germany
asset manager Premier Miton Investors. “One is “An incentive is needed because a tax would working towards the same goal.”
policy, as there is a global policy consensus, and not be tolerated. It’s interesting to see how
the other is economics, as renewable energy is different governments frame the issue, but they While it is a good time to invest in energy include ESG and decarbonisation in your
getting cheaper.” are all moving in the same direction, China there are risks as well as opportunities. “In my business plan, returns tend to be higher.”
included.” 15 years in the sector there has never been a
The economic factor is important, adds Wright: better moment to invest in renewable energy,” Fast-moving technology developments are
“Even under the hostile Trump administration COVID-19 INCREASES PRESSURE continues Ciruelos. “But there is too much making the transition to net zero easier and
solar and wind energy became 12% cheaper At a company level, many are already tackling capital chasing the same opportunities, so you quicker and creating new opportunities for
and that’s a powerful driver because it shows the issue, but many more will have to follow need to be selective. Some investors will make investors all the time. “Offshore wind, for
renewables make economic sense.” soon because the pressure will only increase. the wrong choices.” example, is the fastest-growing renewable
The health crisis caused by Covid-19 has source of energy at a global level, which is very
“There is pressure on companies from EU and strengthened the case for the transition to green “Some funds have come under pressure,” says exciting,” says Ciruelos. “It’s about finding the
national regulators,” says Sophia Truong, an energy as a means of supporting economies as Wright. “Competitive bidding rounds have right pockets of opportunities at the right value.”
energy law specialist at PwC Legal Germany. they recover from the pandemic. increased the prices paid and put pressure on
“In Germany the pressure is huge. The Federal returns.” ENABLING TRANSITION
Constitutional Court overruled our climate law “Most governments see the transition as a With more capital flowing into the sector, it’s
because it doesn’t protect future generations way of relaunching their economies after the However, the wealth of opportunities is such important to take a forward-looking approach
enough.” pandemic,” says Alejandro Ciruelos, managing that if you seek you shall find, he adds. “If and focus on future potential. “Companies and
director, renewable energy, of Sustainable we’re to go anywhere near meeting the net utilities inevitably have legacy issues – they
There is global consensus on the goal of Development Capital. “Investors and companies zero carbon targets set, we’ll need huge may still be using coal,” says Thomas van der
achieving net zero emissions, but regulatory are aware of the risks of ignoring the issue. They investments in renewables, so there will be Meij, senior portfolio manager, infrastructure,
know they just can’t carry on as before.” plenty of opportunities everywhere on a global at Kempen Capital Management. “However, if
level. Investment has to be properly directed, they’re on the pathway to becoming better then
‘Energy transition is one of the Energy demand has been negatively but we’re very constructive on the overall we see the opportunity of allocating capital and
impacted by the pandemic as GDP has fallen investment case for energy transition.” making a difference by enabling that transition.”
megatrends, a multi-decade process across the board, but renewable sources of
that offers many opportunities.’ energy have remained on an upward curve. And investors will be rewarded eventually, says “Energy transition is one of the megatrends,
“The sustainable and clean energy sector Thomas Veith, partner - leader real estate/real a multi-decade process that offers many
Thomas van der Meij, Kempen Capital Management has proved to be extremely resilient,” says assets, at PricewaterhouseCoopers: “If you opportunities,” adds van der Meij. “The transition
10 Real Asset Insight | Issue 11 July 2021 Issue 11 July 2021 | Real Asset Insight 11
Insight & Strategy – Infrastructure Summit
‘No possible solution should be ruled viable,” says Ciruelos. “The next decade will be amazing,” adds Ciruelos. “But costs are falling,
customer-driven, creating innovative solutions so solar is becoming increasingly viable in
out. If we want to get to net zero we’ll that deliver for people”. the north as well. In the end, the technologies
need total open-mindedness.’ that will prevail are the ones that are most
GEOGRAPHICAL FACTORS economically viable.”
Jim Wright, Premier Miton Investors The choice of which renewable energy to opt
for are often dictated by geography as well as Carbon capture and storage is a clear way
Your plans are perfect.
out of fossil fuels into renewables needs to be economics. forward but the costs are still significant.
financed, but customers’ energy bills need to Replacing ‘grey’ hydrogen with ‘green’
be stable and the grid must be upgraded to “In Northern Europe it’s clear that the economics hydrogen is the quickest way to decarbonise,
manage additional capacity.” of wind generation, both onshore and offshore,
are very favourable, so there’s a lot of activity
but it is too expensive. ‘Pink’ hydrogen can also
be produced using nuclear power, but nuclear is
And your financing?
Managing the transition means “keeping and ambitious plans in the sector in the UK, a divisive issue.
the lights on” and making sure the process Norway and Sweden,” says Ciruelos. For your ambitious plans you are looking for a first-class
is affordable for everyone. “In this phase “No possible solution should be ruled out,” financing partner, which can meet your high expectations. We
government support is needed to facilitate In Southern Europe the focus is more on solar says Wright. “If we want to get to net zero we’ll
are a leading bank for commercial real estate and public in-
the transition, until you get to the economies energy. “We’re seeing a very quick ramp-up need innovative solutions and total open-
vestment financing and offer bespoke and intelligent solutions.
of scale and cost reductions that make it in Spain, Greece and Italy and the potential is mindedness.” l
We combine in-depth knowledge whilst keeping the big picture
in mind with ingenuity and working with transparent credit pro-
Five key
T ‘There will be opportunities
he massive transformation that is taking “In the development phase, venture capital can cesses and decision making. You can count on our tailor made
place in the energy sector is creating many target investor returns of 20% plus,” says Veith. solutions and working with you in a pro-active partnership.
for all types of
drivers that
opportunities for investors. “In the commercial viability phase, private
equity investors can aim for 10-20% returns. In investors and different
“Hundreds of billions are needed to transform the third mature phase, infrastructure investors
will speed
www.pfandbriefbank.com
the energy sector and make it green,” says can target returns of 5-10%.” risk/return profiles.’
PricewaterhouseCoopers’ Thomas Veith.
Thomas Veith, PwC
up change
“There will be opportunities for all types of PwC has identified five key drivers in
investors and different risk/return profiles.” the energy market. First is the need for
decarbonisation, which is being pushed not system of energy production which is also
As new tech such as wind and solar, liquefied just by governments and regulators but by cleaner and smarter.
natural gas and hydrogen are developed, they corporates, capital markets and end users.
become viable on a commercial scale, as has Third is clean air policy. “The 2013 Air Pollution
been the case with electric vehicle charging The second driver is technological progress, Action Plan in China has a very significant
and batteries. These technologies can then which is enabling better sources of renewable impact on driving investment and focusing
establish a track record for returns. energy, leading to a more decentralised minds on the issue,” says Veith. “Another
important factor is that technology is making
clean air more affordable, so it can have more
Infrastructure investment maturity curve of an impact on people’s lives.”
maturity The fourth driver is growing environmental
Increasing concerns, which are behind the search for new
... and then establish a
track record for returns solutions such as technology to create energy-
New technologies ... that become viable on from-waste to reduce pollution in the oceans.
are developed... a commercial scale... For example:
• Wind and solar The final driver is ageing infrastructure. Energy
Maturity
For example:
For example: • Liquified natural gas infrastructure production plants were built decades ago
• Electric vehicle charging
• Wave • Energy-from-waste incineration and are coming to the end of their useful life.
• Batteries
• Tidal “The push for new sustainable infrastructure
• Connected home
• Hydrogen is coming to the fore as the demand for
renewable green energy is growing,” says
Maturity Start-ups and Research Growth into new markets Consolidation and continued growth Veith. “There’s a real competition between old
phase & Development and new.”
Venture capital Private equity Infrastructure investors
20%+
Source: PwC
Target investor return Target investor return 10-20% Target investor return 5-10% The winner will be multi-centralised energy
(IRR) (IRR) (IRR) production, he says. Traditional energy supply
chains are changing significantly and the new
Typical investor supply chains will be much more decentralised.
12 Real Asset Insight | Issue 11 July 2021 Issue 11 July 2021 | Real Asset Insight 13
Insight & Strategy – Infrastructure Summit
realasset
INSIGHT
Infrastructure offers investors Projected growth in AUM ($trn)
Private equity
Private credit
Infrastructure
Commodities
Real estate
“We see huge opportunities in Europe thanks
to the European Green Deal,” says Jan-Peter
Mueller, executive director, head of asset
diverse assets and resilience
15.0 structuring and infrastructure investments, at
15 13.7 14.4 Commerz Real. “There will be a lot to do in the
UK, in Germany and in the Nordics, but Spain,
Portugal and Italy are going strong as well.”
10 9.5
T
“We go where regulations are welcoming,
Stable returns even he need to upgrade assets and make them
sustainable is powering the infrastructure
Thomas Veith, partner, real estate, at
PricewaterhouseCoopers. “International 5
returns are good and public policy initiatives
create unique chances,” adds Araujo. “In Europe
in times of crisis sector forward. capital is looking at the sector and there is it’s all built around the green recovery plan. At
and huge amounts According to a PwC study, infrastructure assets
a real race for investments.”
0
the micro level there are many opportunities.
It takes a lot of work, but you end up with a ‘Most portfolios
of state investment under management will double to $2 trillion by “There is a huge need for social infrastructure 2019 2025
worst case
2025
base case
2025
best case portfolio of businesses that can do very well.” are overweight
2025 in the worst-case scenario, increase to investment and the private sector needs to
make infrastructure $2.1 trillion in the base case scenario and grow be involved because the state sector is not
Source: PwC
GERMAN SPENDING BOOM in Europe,
a compelling to $2.2 trillion in the best case scenario, the
same level as real estate AUM (see graph).
investing nearly enough,” adds Anne Copeland,
head of specialist funds, real assets equity, infrastructure, at M&G Investments. “There are
In Germany new greenfield infrastructure
developments will be needed on top of existing
infrastructure
proposition, reports at Aegon Asset Management. “Appetite from some great opportunities in the listed realm, and stock transformation. By 2030, 10,500 km of is very popular.’
Nicol Dynes
Infrastructure investment has proven it can
deliver in times of crisis. The pandemic has
investors is off the scale and early movers have
really benefited.”
that’s why in our global equity allocation we’re
overweight in Europe.”
new motorways and an additional 3,118 km of
railways will be built, while the waterways will
Richard Abadie, PwC
had a negative impact on many sectors, but be expanded by 1,155 km. PwC calculates that
infrastructure is stable and has a low correlation BEST OPPORTUNITIES The framework is positive in Europe because €300 billion will have to be invested just in
to the general economic cycle. It also offers a Experts agree that Europe offers the best capital investment is incentivised, especially physical, not digital, infrastructure in Germany.
huge range of sectors and segments to invest opportunities when it comes to infrastructure. in new build or retrofit, although there will be
in, from energy to telecoms to healthcare. “There are opportunities everywhere, but in a lag between the stimulus available now and “The numbers are huge but it won’t be a
Europe we have some of the most attractive the wave of capital rolling in. “Most portfolios problem to finance,” says Veith. “The key
“Infrastructure is the fastest-growing asset valuations in infrastructure globally,” says are overweight in Europe, it’s very popular,” challenge is capacity and capability in the
class and real estate comes second,” says Alex Araujo, fund manager, global listed says Richard Abadie, partner, global leader of public sector, so the private sector needs to be
capital projects & infrastructure group, at PwC. involved. Every year in Germany we see over
“In developed markets there’s an ecosystem 50 large-scale transactions, in the hundreds of
‘There are opportunities everywhere, but in that works very well and the amount of capital millions of euros, and there is room for many
available exceeds what is needed.” more deals in future.”
Europe we have some of the most attractive
valuations in infrastructure globally.’ Emerging markets are a trickier proposition, In terms of where the capital is going there is
related to currency risk and issues over security increasing demand for renewable assets and
Alex Araujo, M&G Investments of legislation and regulations, he adds. social impact investing. The downside is that
14 Real Asset Insight | Issue 11 July 2021 Issue 11 July 2021 | Real Asset Insight 15
Coming soon...
Insight & Strategy – Infrastructure Summit
asset acquisition is becoming more difficult, as storage,” adds Abadie. “If you take risks now
more players are entering the market wanting a you will get massive returns in the long term.” ISSUE 1 | SEPTEMBER 2021
IMPACT
piece of the action.
Telecoms is another sector that is attracting Trends & opportunities
“We’ve seen change, a globally coordinated interest. “We’ve been investing in fibre optic in impact investing
effort to restart economies, and much of that networks, telecom towers and data centres,”
is focused on infrastructure, which is good for says Araujo. “They are a core part of our Investing in affordable housing
society,” says Araujo. “A lot of money is being portfolio and they’ve done very well this past
thrown at efforts to rebuild, with a different focus year, but the winds keep shifting.” When investment makes a difference Green finance strategies
in different regions.”
Investors must be nimble and flexible to grab
HEALTHCARE RESILIENCE opportunities that arise in other areas. During
Healthcare, specifically operational businesses, the pandemic in the listed realm valuations
‘We see huge technology and service delivery in the buildings, of airports were very attractive, for example,
opportunities in has been resilient. “Healthcare has been a very Araujo points out. “We invest for the long term
defensive play,” says Aegon’s Copeland. “Long but we must exploit opportunities that come
Europe thanks to leases guarantee long-term income streams. up. We like transitional businesses, such as
the European We’ve had 100% payment of all rents throughout reconfiguring high voltage networks in Germany
the crisis and not many funds can say that.” to accommodate renewables, or making low
Green Deal.’ voltage networks smarter. Areas which may not
Jan-Peter Mueller, In the energy sector the downturn has been be obvious to people but are very interesting.”
Real Asset Impact | Issue 8 | September 2021
less significant because demand is so high.
Commerz Real “Just think of the energy needs of data centres, There is an increasing crossover between
of Google, Amazon and so on,” says Commerz infrastructure and real estate. “The regulatory
Real’s Mueller. “What’s important is feeding that framework needs to change, as the two sectors
huge hunger for energy with green energy.” merge more and more,” says Veith. “The
good news is that it’s not difficult to combine
“We’re in the early stages of the energy infrastructure investment with a green agenda,
transition to hydrogen, carbon capture and without greenwashing.” l
ESG now informs investment into all infra assets
T
he challenge for infrastructure
investors will be the number of assets
‘The infrastructure market has a wide
available to invest in. “The spectrum of sub-sectors, each has its
infrastructure market has a wide spectrum
of sub-sectors so it can be difficult to own characteristics and requires a
define,” says Thomas Veith, partner, real unique set of skills and expertise.’
estate, at PricewaterhouseCoopers.
“Each sub-sector has its own Thomas Veith, PwC
characteristics and requires a unique
set of skills and expertise.”
The ESG theme now runs across all are kicking in. “The EU is a pioneer in
PwC has identified five segments: five segments. An increasing number pushing the green agenda forward,”
Global recovery The healthy investor
• Social infrastructure, which includes of infrastructure funds support the says Veith. “Unfortunately now it’s losing
Circularity, transformation Impact investing in
hospitals, social housing and schools; transformation agenda of public and speed because each of the 27 countries
• Transport & Logistics, comprising roads, private stakeholders. at national level has to define how the and building back better healthcare and senior living
railways, ports and car parks; taxonomy will be integrated in local laws.”
• Energy, from generation, transmission “In all private markets ESG is very
and distribution to gas networks and oil important,” says Veith. “It is seen as a There are positive signs for ESG outside
pipelines; value component that has to be factored Europe as well: US President Joe Biden Contact us now for the launch edition in September 2021
• Renewables, which range from wind to in, not as a burden or a cost.” has put it at the centre of plans to invest
solar to battery to waste; $2 trillion in infrastructure upgrades.
• Telecoms & Digital, which includes ESG is a hot topic around the globe, China is leading the green bond boom
Advertising & Sponsorship Editorial & Content Partners
mobile networks, fibre networks and but in Europe it has added momentum and other countries, from Malaysia to
data centres. because of EU taxonomy, as regulations Australia, are pushing hard for reform. Frank Beinborn Director Client Relations Richard Betts Group Publisher
frank.beinborn@realassetmedia.com richard.betts@realassetmedia.com
+49 152 54 87 86 68 +44 7557 37 31 34
16 Real Asset Insight | Issue 11 July 2021Insight & Strategy - Infrastructure News
BlackRock raises $1.67bn for infra debt fund final round Commerz Real infrastructure fund backs
BlackRock Real Assets raised $1.67 billion
in its final fundraise for the Global
Infrastructure Debt Fund, inclusive of
$150 million in co-investments.
markets and backed by visible cashflow
streams. BlackRock said the fund’s focus on
essential assets helps deliver “uncorrelated
income and portfolio resilience”, which it
infrastructure, the opportunity for private
investment has increased.”
BlackRock Real Assets established its
infrastructure debt investment capability in
Spanish and Finnish green energy farms
The fund has commitments from more points out is particularly relevant given the 2013 and the GID team manages $16.6 Commerz Real has acquired its first Finnish
than 20 institutional investors, including pandemic-related global market uncertainty. billion in global client commitments, which asset for the Klimavest impact fund. The
global insurance companies, public and The firm said in a statement: “The represents about a quarter of BlackRock acquisition follows soon after Commerz
private pension funds, and family offices, successful fundraise demonstrates the Real Assets’ total client commitments. Real announced the acquisition of a
from the US, Canada, Japan, and Korea, continued appeal of infrastructure debt “The team is working hard to close portfolio of Spanish solar energy parks for
representing more than three times the investments for institutional investors, due several attractive investment opportunities the Klimavest fund, which was launched in
initial fundraising target. to their potential for attractive income and across key sectors, including digital November 2020.
GID is BlackRock’s first commingled fund portfolio diversification benefits. With infrastructure, which has emerged as a star The Kuuronkallio onshore wind farm has
in the high-yield infrastructure debt market. regulatory and budget pressures limiting of the pandemic,” said global head of been bought from international project
It targets investments mainly in developed traditional bank and government lending in infrastructure debt Jeetu Balchandani. developer and operator, Bremen-domiciled
WPD.
Macquarie unit joins Heliox for
The wind farm, which is in the municipality
The Kuuronkallio onshore
Knight Frank charged of Kannus in western Finland and was
connected to the national grid at the
wind farm in western Finland
with acquiring Osprey’s
European bus charging rollout
beginning of 2020, comprises 14 turbines
with a total installed capacity of 58.8 MW, cumulative installed capacity of 68.4 MW. fund OPTrust; and Juan Béjar, founder and
EV network corresponding to an annual electricity
generation of about 216 gigawatt-hours
Müller said the determining factors in the
Kuuronkallio acquisition were the location,
president of Bruc Management.
The three parks’ combined installed
As the race begins to install sufficient Macquarie’s Green Investment Group has The JV said in a statement the service (GWh). According Eurostat figures, it will the established technology, the renowned capacity of 131 MW-peak corresponds to
charging infrastructure to keep pace formed a partnership with Dutch fast- reduces one of the main barriers to fleet meet the average requirements of about developer and, “above all, securing stable annual electricity production of 230,506
with the growth in electric vehicles, charging technology company Heliox electrification by removing up-front costs. 25,000 Finnish households. The resulting cash flows for our investors”. MWh, which is estimated to meet the needs
Osprey Charging has appointed to start delivering electric bus and truck Heliox implemented the world’s largest reduction in CO2 emissions amounts to There is a 10-year power purchase of 74,000 households. It will also lead to
Knight Frank as its UK nationwide site charging infrastructure across Europe. bus depot charging network at Amsterdam’s nearly 50,000 tonnes a year. agreement for the entire energy production an annual reduction in CO2 emissions of
acquisition adviser. The partnership is using a ‘charging-as- Schiphol Airport in 2018 and was recently “Scandinavia is an attractive market for with a subsidiary of the technology giant approximately 63,520 tonnes.
Osprey has plans to deploy thousands a-service’ model and will own and fund the selected by First Bus to power its depot us, and we are confident that we will be Google, which operates a major data centre This is the second solar investment by
of rapid EV charging stations across construction of charging infrastructure and in Glasgow, Scotland. The depot is being able to acquire additional assets there in Hamina, 150 km east of Helsinki. Klimavest in Spain. In November 2020 the
the UK and has investment from Cube maintain the charging facilities on behalf of reconfigured to enable on-site charging of so as to diversify the fund portfolio,” said In Spain, Commerz Real has acquired fund acquired a solar park near Tordesillas
Infrastructure and Investec. It provides customers. up to 300 eBuses, transforming it into the Commerz Real’s head of infrastructure a portfolio of three solar parks for the in the Valladolid province.
fully funded and managed charging Initially, the target markets are the higher UK’s biggest electric charging station. investments Jan-Peter Müller. Klimavest impact fund from an international “We see a lot of growth potential in
points that operate contactless payment growth EV markets, which include the “The transport sector presents one Commerz Real had already acquired consortium comprising Cero Generation, renewable energies in Spain and on the
and do not require a contract. Netherlands, Belgium, Germany and the UK. of the world’s greatest decarbonisation a portfolio of three onshore wind farms a portfolio company of Macquarie’s Green Iberian Peninsula in general and are looking
Osprey’s target sites include out- GIG and Heliox say they will provide fully challenges. We’ve got to accelerate the in southern Sweden from the Swedish Investment Group; Bruc OPT Energy forward to making further investments
of-town retail, shopping and leisure financed, turnkey charging solutions for the deployment of low-carbon technologies company Eolus Vind last September. It has a Partners, owned by the Canadian pension there,” said Müller.
parks, drive-thru restaurants, roadside life cycle of the projects in return for fixed across all segments of the sector,” said GIG
retail and food stores, business parks regular payments. head of energy technology, Greg Callman.
and industrial sites. It will also create
charging stations close to major
motorway and A roads in urban and
Data campus to be built at Segro’s Slough estate
edge-of-town locations. Data centre provider Global Technical operating individually, or as one interlinked phases and should be operational by Q4
“EV demand is growing rapidly and Realty is to establish a major data centre campus. 2022. The first phase will provide 132,575
there needs to be sufficient high-quality campus in Slough following an agreement The development will be built in two sq ft of space, the second phase of 268,136
charging infrastructure to support with Segro. sq ft could start early in 2022.
this growth,” said Knight Frank’s head GTR, which is backed by US-based The project is expected to create around
of energy, sustainability and natural investor KKR, will take 400,711 sq ft 200 jobs during construction and a further
resources David Goatman. “This (37,227 sq m) for a 25-year term to operate 80 permanent roles on completion.
opportunity also allows landlords bespoke data centres for high-growth “The data centre space is a fast-moving
and developers to advance their global technology companies. one. GTR was established to support
own net zero aspirations at no cost, The facility will support growing demand its customers in providing a data centre
with Osprey developing and managing for third-party data centre provision. solution wherever in the world there is the
Heliox has been selected
the charging points, typically on a 20+- Segro will design and develop the site demand for it. We are delighted that the UK
to reconfigure the First Bus
year lease.” to GTR’s requirements. It will comprise will become home to our flagship concept,”
depot in Glasgow
three independent data centres capable of said GTR CEO Franek Sodzawiczny.
18 Real Asset Insight | Issue 11 July 2021 Issue 11 July 2021 | Real Asset Insight 19Insight & Strategy - France
ESG compliance is now a
‘go or no go’ for investors
A ‘We see
s is the case in many other
countries ESG compliance
has become a must in the multinational
French market. tenants
“There is huge market demand for restructuring
ESG-compliant investments,” says
Sabine Leuschner, partner at law firm
interiors because
Sagasser. “It’s a legal framework at the they want to present a
moment, but it’s also a marketing
issue. We see multinational tenants
certain image to their
Image: Adobe Stock/Stockbym
restructuring interiors completely clients and investors.’
because they want to present a certain
image to their clients and investors.” Sabine Leuschner, Sagasser
In central Paris period assets present different standards, regulations and
an additional challenge, as it is market expectations on ESG. “The
complex and costly to make them problem is that rules are different in
ESG-compliant without stripping them different countries,” says Didier Unglik,
International capital gears up
out completely. “The Haussmannian president of L’Etoile Properties. “For
shortage of available stock and a deeply buildings are very difficult to adjust,” example, we’re big believers in nuclear
polarised market. “There are tremendous says Leuschner. energy so in France it’s ESG-
amounts of capital ready to be invested, but they compliant, but in Germany it’s not.”
for return to French market
are focused on super-core assets, where yields But there is no alternative as ESG
have compressed to below 3% in Central Paris compliance can now determine The lack of harmonisation can lead to
because of lack of product,” says Rendall. whether a sale or a lease contract tricky situations. “Each country has its
goes ahead. “Basically it’s a go or set of labels. A perfect French asset
I
In the CBD and prime markets the limited no-go for international investors,” may not qualify for a loan from us
Overseas investors nternational investors are itching to return
to the French market. Real estate is a market
international investors, especially from South
Korea, North America and the Middle East,”
offer has led to strong competition. “In prime
locations there is a fierce battle to grab the few
says L’Etoile Properties’ Guillaume
Unglik. “Buyers are really interested
because we follow German criteria,”
says Berlin Hyp’s Benjamin Cartier-
have been largely of tangible assets that investors need to see adds Guillaume Unglik, managing director, opportunities in the market, and you have to in the details of ESG compliance. Bresson. “And that’s just on the
and visit, so the end of travel restrictions will France, of L’Etoile Properties. pay extra for not-so-great rewards,” says We need to explain step by step how environmental side: if you add the
prevented from have an immediate impact. Guillaume Turcas, managing partner of Faro the labels have been obtained and social and governance issues, it
doing deals in “Investors’ inability to travel has really stymied
The reason, he says, is that “the Parisian market
remains one of the largest, most liquid and
Capital Partners. which features of the buildings have
been improved.”
becomes even more complicated.”
France due to the the market,” confirms David Rendall, managing most resilient in the world and it continues to be LESS COMPETITION Whatever the difficulties, the direction
director of La Française Real Estate Managers. attractive to international capital”. Investors find a lot less competition in the For investors and real estate of travel is clear. ESG compliance is
pandemic. Now “It has been difficult to deploy capital and the Parisian suburbs or in the regions, he says, companies working across Europe it now a must-have and the way to start
they’re ready to absence of Korean investors, who have been
very active in the Paris market, has reduced
The French capital is also well placed to benefit
from the effects of Brexit, says Rendall: “There is
but they must deal with a less reliable leasing
market and uncertainty over the exit. “That’s the
can be difficult to get to grips with might be with the environmental
requirements which are
come back, reports volumes. But now the worst is behind us.” strong demand for Eurozone assets and Paris is choice: you face competition or you face risks,” easier to understand
Nicol Dynes “The French market has seen many challenges,
a fantastic market for international investors.” adds Turcas. and comply with.
from the gilets jeunes to Covid-19, but despite When investors are able to return they will find The difficulties with value-add assets are “The sustainable aspect
this we see increased appetite on the part of the pre-pandemic challenges persist, namely compounded by banks’ unwillingness to finance is part of the due
what they see as risky products, so investors diligence that you have
Image: Adobe Stock/Peter
must find alternative lenders. “The availability of to do,” says Faro’s
‘There are tremendous amounts of capital debt is just not there,” says Rendall. “Banks are Guillaume Turcas.
not keen to lend for marginal assets.” “Labels may differ, but
focused on super-core assets, where yields the model works
have compressed to below 3% in Central Paris.’ The shift to core in difficult times applies to because energy
banks as well. “We have a strong appetite for efficiency can be
David Rendall, La Française Real Estate Managers making new loans, but we must focus on quality,” Older buildings in Paris are difficult to make ESG compliant measured.”
20 Real Asset Insight | Issue 11 July 2021 Issue 11 July 2021 | Real Asset Insight 21Insight & Strategy – France
MIPIM September Edition
7 - 8 September 2021 • Palais des Festivals, Cannes
Investors are looking beyond Paris
MIPIM returns
to regional cities such as Lyon
to Cannes
Image: Adobe Stock/Shulga
‘We have a
New world: New era
strong appetite
for making new
loans, but we
must focus on
says Benjamin Cartier-Bresson, head of Paris
office at Berlin Hyp. “We must finance properties
Leuschner, partner at law firm Sagasser. “In
future inevitably discussions will be opened up
Time to reconnect
quality.’ with good cashflow and that hasn’t been easy in and letting contracts will be renegotiated, it will
the last few months.” be a question of supply and demand.”
Benjamin Cartier-
Bresson, Berlin Hyp The debate over the future of home working
has particular resonance for Paris, which is
Competition has reached a high in the office
sector and the situation is unsustainable. “For
MIPIM® is a registered trademark of Reed Expositions France - All rights reserved
Europe’s biggest office market. “Things always every tenant looking for 5,000 sq m there will
go back to normal after a crisis,” says Didier be 10 landlords trying to attract them,” says
Unglik, president of L’Etoile Properties. “There Guillaume Unglik. “Incentive packages have
will be more working from home but it won’t become ridiculous, practically giving half of the
become the norm. Business can only get done rent free to tenants, which doesn’t make sense.
when people get together and they want to go There will have to be a correction. I predict that
back to the office.” headline rents will have to decrease in the next
few months.”
THE CHANGING OFFICE
There may even be a need for more space, as There are signs that companies are looking
people will remain aware of social distancing beyond Central Paris to the outskirts and
after the pandemic. The design of office to regional cities. “The backbone of Paris is
buildings will change, with more individual changing and hubs are popping up around the
offices or space between desks and more new Grand Paris stations,” says Turcas. “Saint-
meeting rooms. “Offices will become more Denis is a good example of this trend. Also,
like meeting places, with auditoriums and outside the capital there are cities you have
areas for video conferencing,” predicts Rendall. never heard of that are getting attention.”
“Covid-19 will accelerate the digitalisation of
the workspace.” Improvements in infrastructure and good
The first event to reconnect ‘in person’ with industry leaders to achieve business goals and reassess strategy
transport links are driving the new trend.
In France the impact of the crisis has been “The markets that are performing well are
mitigated by government help, so a question the well-connected ones,” says Didier Unglik.
mark remains over what will happen to leases “Cities like Bordeaux or Lyon are sparking new
and contracts next year. So far the situation interest. Companies may choose to keep their
has been good. “It has been quite stable in headquarters in Paris but have coworking space
France, except in the retail sector,” says Sabine in Nantes. It’s a trend for the future.” l
‘The backbone of Paris is changing and hubs are
popping up around the new Grand Paris stations. Exhibition Conferences Networking Awards
Saint-Denis is a good example of this trend.’
Guillaume Turcas, Faro Capital Partners
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