According to sources, the UK insurance group has made a key hire for its Legal & General Investment Management (LGIM) Real Assets platform that will likely have a significant impact as it looks to invest equity into property sectors and styles of its preference in Europe.

Toby Creamer is hotly tipped to join the company as Head of European Transactions for LGIM Real Assets in August.

Several sources said the London-based professional has decided to leave current employer, CBRE Investment Management (IM) EMEA, where he is currently a senior director responsible for the portfolio and transactions across Europe and the UK for CBRE IM Europe Logistics Partners.

Expansion
Legal & General has been a large, influential and longstanding real estate investor in the UK for decades but not on the Continent.

That said, in 2020 the company did add real estate credit investing on the Continent when it hired James Spencer-Jones from Cushman & Wakefield as Head of Real Estate Debt, Europe.

The decision to expand to equity investing in Europe comes at an exciting and transformative time for Legal & General.

The firm is combining LGIM with Legal & General Capital (LGC) to create a single Asset Management division as the group looks to sharpen its focus and grow its Private Markets AUM to £85 bn (€100 bn) by 2028 and embed a revised capital allocation strategy across the group.

That is a part of a corporate overhaul led by new group CEO, António Simões, who joined the insurer in January this year from Banco Santander Spain.

Legal & General publicly stated its new corporate mission and multi-faceted plan in June.

It said: ‘We are bringing together LGIM and LGC into a single, global asset manager, and investing to scale and deepen their complementary capabilities across public and private markets.’

‘We plan to materially scale our in-house and origination platform capability in private markets, significantly expanding our capabilities and client offerings across Real Estate, Private Credit and Infrastructure, including through an accelerated programme of fund launches.’

Among key personnel changes happening as a result, Michelle Scrimgeour is stepping down as LGIM CEO. The company is working on a global search for a CEO of the new enlarged Asset Management division. In the meantime, Scrimgeour will lead the transition alongside Laura Mason, who is appointed CEO of Private Markets having been CEO of LGC.

Nothing has yet been said publicly on other senior figures involved in real estate such as Bill Hughes, Global Head of Real Assets, though there is no indication of any change being made. The Real Assets team is a significant part of the LGIM business that is now being merged with LGC.

LGIM Real Assets manages around £39 bn of AUM of both direct and lending strategies. In the UK, it manages around £18.3 bn of real estate equity for institutional and retail clients. A move into Continental Europe equity investing is expected to boost this further.

According to PropertyEU’s recent TOP100 dealmakers ranking, LGIM is ranked Number 22 in the world for European real estate deal volume. In the calendar year 2023, it executed €1.857 bn of transactions (acquired €1.456 bn, sold €402 mln). That is just less than the likes of Patrizia (€1.9 bn, 20th), AEW (€2 bn, 17th) CBRE IM (€2,162 bn, 14th), and M&G (€2.245, 10th) but more than rivals such as Abrdn (€1,449 bn - only disposals, 29th) and Aviva Investors (€1.666 bn, 26th).

It is not yet clear what Legal & General’s direct real estate equity strategy will be in Continental Europe. But it is likely the strategy will be geared towards long income producing real estate.

One clue as to strategy was provided in April when Robin Martin, Global Head of Investment Strategy & Research, Real Assets, provided a report, “top picks for future-facing portfolios”, highlighting opportunities in residential and urban logistics, digital and high-tech sectors, and well as the energy transition infrastructure sector.

Another indicator is what its UK direct real estate investments has been busy with of late, and the strategy of its Continental Europe real estate debt platform.

Its UK direct equity approach is geared towards income-producing property across commercial real estate and the residential sectors mostly on behalf of pooled funds but also for some asset-specific JVs and segregated accounts.

On the lending-side, it specialises in senior debt loans ranging from £20m to £400 mln secured on income-producing real estate assets in the UK and major cities of Western Europe across a wide variety of sectors, including prime office, industrial, retail, residential, build-to-rent, private rented sector (PRS) and student accommodation.

One of Legal & General’s most recent announcements came just a few weeks ago when it revealed the formation of the L&G Affordable Housing Fund for deployment across England, again highlighting its liking for residential property.

The fund has received a cornerstone commitment of £125 mln from ACCESS Pool. The new investment vehicle is being seeded with a portfolio managed by L&G’s Asset Management division.

Legal & General said the fund would aim to positively impact hundreds of people's lives, focussing on “Equity and affordability” as its core social priority and the group’s commitment in aiming to achieve net zero carbon by 2050 or sooner.

The company has invested £1bn in affordable housing in the UK since establishing its own developer and operator of affordable housing in 2018.

The announcement of the fund was important enough for Legal & General’s group CEO to comment upon.

Simões said: ‘Today’s launch is an important step forward in putting pensions capital to work by investing in tangible assets that can help benefit the real economy and enhance local communities.’

He added: ‘This Fund builds on L&G's ambition to scale our private markets platform and catalyse our own balance sheet investments by offering our clients new investment opportunities that aim to deliver compelling financial returns whilst tackling real-world challenges.’

Real estate market participants say they are curious to see how the new Asset Management division will operate now that LGIM (including Real Assets) is combined with LGC. Some suggest that in a way, LGIM Real Assets and LGC have been cannibalising or competing with each other in the housing sector not only competing for new investments but for balance sheet capital from the Legal & General Group.

LGC’s aim has been to address chronic under-supply of housing, as well as backing new investment in infrastructure and clean energy and investing in start-ups to drive innovation. Meanwhile, LGIM also has direct UK residential real estate strategies including the private, affordable rented sector.

It is thought the decision to make a move into Continental Europe real estate equity investing was made prior to the group decision to combine LGIM with LGC. Nevertheless, the direct equity strategy could now benefit from the creation of the Asset Management division with clearer lines, sharper focus, less internal competition and the availability of balance sheet capital for the enlarged group.

In March this year, Neil Meikle joined LGIM as Head of Real Estate Capital Raising from abrdn.

Creamer, who is thought to be starting as Head of European Transactions at the beginning of August, is likely to be an important part of its efforts in real estate too.

According to his LinkedIn profile, the real estate professional joined CBRE IM in October 2015. He originally served as director in its value add/opportunistic-styled Europe Value Partners Fund series involved in European and UK acquisitions and portfolio management. He took up his current role in its Logistics Partners series in October 2021.

Prior to joining CBRE IM, he worked for Rockspring, the London-based European investment manager that was taken over by Patrizia in 2017, and he was an analyst at AEW Europe after a brief stint as a leasing executive at Cushman & Wakefield in Asia.