Principal Real Estate Europe manages both funds and segregated accounts, with the latter more suited to those with a larger portfolio or specific investment criteria.
Our approach to segregated accounts always begins with the client. By understanding a client’s risk appetite, tax position, approach to leverage and return requirements, we are able to consider the role any investment may play within a client’s portfolio and advise them accordingly.
Once the criteria are set, a strategy is agreed and investments sourced by our transaction teams. Acquisitions are transferred to our specialist asset managers and the portfolio kept under review by an investment manager.
With segregated accounts, the client often retains control or veto of the transaction decisions, but every key investment decision is subject to the scrutiny of our Investment Committee to ensure best advice to each client.
We were particularly pleased that two of the mandates were awarded to Principal Real Estate Europe following a market search process and due diligence review by pension fund consultants Mercer and Townsend.
2017 Corporate Pension Fund for cycle resistant assets with a 6.5% ungeared IRR – €100 million initial allocation
2016 Brazilian family office Iberian Retail: 2 shopping centres currently managed
2016 Sharia compliant Core/Core+ mandate – €200 million + investment capacity
2013 SH Immo: Target €100 million within 5 years
2013 Sachsen Doctors: Target €200 million portfolio Hotels – value add strategy
Segregated account, structured as a Spezialfond in the the Principal Real Estate Europe KVG.
€23 million / 48.6%
Investment in core office assets in the Cologne region with secure long term income streams and limited risk of capital loss.
Three assets acquired to date with strong investment pipeline. The fund has dry powder of €40 million, targeting €100 million GAV over 5 years.
Exclusive mandate to invest in Core and Core+ assets across Europe.
Investment phase commencing.
To target core/core+ assets with single let long leases or multi-let with active asset management with an IRR target of 7.5%-9% and an income return of 6-7%.
Pipeline portfolio under development. Targeting GAV of €200 million over 3 years.
Mandate to provide investment and asset management services.
€105 million / 13.3%
To invest in core/core+ retail, office and logistics assets across Spain and Portugal to deliver an 8% to 12% IRR
Two Spanish shopping centres under management. Pipeline identified.
Segregated account mandate acting on behalf of the Corporate Pension Fund Trustees.
Investment phase commencing.
Focused on avoiding underperformance in a cyclical downturn, rather than achieving outperformance in a cyclical rally. Target unlevered IRR of 6.5%.
Pipeline portfolio under development.
Fiduciary management mandate providing assurance to the board on governance and operations.
£154 million / n/a
The investment is in a residential property company specialising in the provision of affordable housing with long term, inflation linked rents to support long term, socially responsible investments.
The company has acquired over 1,000 shared ownership affordable housing properties across the country and has further pipeline.
Giles Smith - Head of Fund Management - Biography and contact details
Head of Fund Management
Principal Real Estate Europe. A Chartered Surveyor with 14 years’ experience in fund management and corporate real estate, Giles began his career with ATIS Real Weatheralls, providing corporate real estate and consulting services for major listed companies such as London Electricity and Barclays. Giles moved on to become Real Estate Corporate Finance Manager at Deloitte & Touche, working on real estate transactions including the sale and leaseback of 41 hotels for the WA Shearings Group (£110m) and the sale of 24 hotel assets for Macdonald Hotels (in excess of £400m); as well as providing structural and strategic advice on real estate investment funds. More recently, Giles became a Fund Manager with GPT Halverton in 2008, and has been a Fund Manager with Principal Real Estate Europe since 2010, responsible for a number of real estate investment funds including HBI Netherlands, Dutch Active Fund, Benelux Industrial Partnership, German Office Fund and Alecta Netherlands.
Phone: +44 (0)20 7355 8800
Principal Real Estate Limited
Phone: +44 (0)20 7355 8800 Fax : +44 (0)20 7355 8801
Risks of Investing in Real Estate Assets:
No assurance can be given that returns will be generated which are commensurate with the risks of investing in the type of investments to be made. Investments in real estate assets are subject to a range of risks that could cause such investments to lose value. These investments are speculative in nature and the possibility of a loss of the entire amount invested exists. The possibility of partial or total loss of investment will exist, and prospective investors should not proceed unless they can bear the consequences of such loss.
Economic and regulatory changes that impact the real estate market generally may cause operating results to suffer and decrease the value of investments. Real estate investments will be subject to the risks incident to the ownership and operation of property, including but not limited to any or all of the following: the general economic climate, actual or perceived property values, local property conditions (including the availability of properties relative to demand), vacancies, adverse use of neighbouring real estate, credit risk arising from the financial condition of tenants, buyers, and sellers of properties, geographic or market concentration, inability to obtain any required permits, consents or entitlements for a reasonable cost or on reasonable conditions or within a reasonable timeframe; facts relating to the condition of the property not discovered by due diligence, competition from other areas, government regulations or policies (such as changes in regulations governing land usage, improvements and environmental issues), liability arising out of the presence of certain construction materials, uninsurable losses, any need to defend title, the need to advance capital to protect an investment, fluctuations in interest rates and the risk that the cost of owning real estate may exceed the income produced.
Property has historically experienced fluctuations and cycles in value, and local market conditions may result in reductions in the value of real property and difficulty in assessing value. The marketability and value of real property will depend on many factors, including changes in general or local economic conditions; changes in supply of, or demand for, competing properties in an area; changes in interest rate; the availability of mortgages and related finance; the promulgation and enforcement of governmental regulations relating to land-use; issues relating to environmental protection and occupation safety; which may render the sale of a property difficult; the financial condition of tenants, buyers; changes in land tax rates and operating expenses; and energy and supply shortages.
Real estate investments are generally illiquid and there may be little recognisable market for sale of those investments or by reference to which they can be valued. Further, in light of the illiquidity of the investment, it may be difficult to dispose of the investment at a price similar to the acquisition price. Returns will also be reliant on the skill and judgement of agents and consultants to value and advise on the terms of real estate transactions relating to the investments such as lease negotiations.
Concentration in any one region may arise from time to time. For example, at any given time, certain geographic areas may provide more attractive investment opportunities than others and, as a result, an investor’s portfolio may be concentrated in those areas. The risk that payments on investments could be adversely affected by defaults or the general deterioration of underlying assets is likely to be increased to the extent that the portfolio is concentrated in such a way which, consequently, could have an adverse impact on the value of the investments.
Due diligence on properties may not reveal all conditions that may decrease the value of an investment. Not all circumstances affecting the value of an investment can be ascertained through the due diligence process. If the materials provided are inaccurate, if the sufficient investigations are not made, or if the due diligence process fails to detect material facts that impact the value determination, an investment may be acquired that results in significant losses.