Editor's Choice: Trimming down and bulking up

Property investment companies - particularly retail players - seem to be taking one of two routes to stay competitive and to realise future growth: trimming down or bulking up their portfolios.  Deals editor Cormac Mac Ruairi looks at exponents of this trend over the past year. 

For those of us who are spending every free hour in December trying to track down the perfect gift, it won’t come as a surprise to read in the December edition of PropertyEU Magazine that the retail sector is being transformed. Personally, I have spent far more time in online webshops than in high street stores. Yet the extent of the transformation across every aspect of the sector is breathtaking – and gathering pace.

A report on our retail innovation briefing held at Mapic suggests that up to 50% of human roles will disappear from retail in 20 years as technology broadens its reach and the digital and physical realms merge. Millennials are arguably even bigger disruptors, driving change by prioritising experience over 'purchasing things'.

How is the retail real estate sector reacting to all this innovation? While various answers emerge in this edition, they boil down to two key trends: trimming down and bulking up.

Atrium European Real Estate has taken the first approach. In his first interview since his recent appointment as CEO, Liad Barzilai outlines how the CEE shopping centre owner has added  €1 bn of asset value to the portfolio over 10 years, while the number of properties was reduced from 160 to just 60. ‘That’s the essence of our current strategy – concentrating on owning large, dominant shopping centres in core CEE markets,’ he says.

But unlike CEE peer Immofinanz which recently sold its Moscow shopping centres in a €900 mln deal, Atrium has no plans at the moment to pull out of Russia.

In December it emerged that Unibail-Rodamco and Hammerson are bulking up considerably, presenting plans for the respective takeovers of Westfield (€21 bn offer) and Intu Properties (€3.9 bn). For Unibail-Rodamco, this is an opportunity to gain a foothold in London, Milan and the US, while Intu gives Hammerson access to the Spanish market. 

As detailed in the Year in Review and our Brokers Special in the December issue of PropertyEU Magazine, these mergers mirror what is happening across the broader real estate sector. As 2017 draws to a close, the new property arm resulting from the combination of Aberdeen AM and Standard Life Investments is taking shape. But there are questions as to whether the contrasting styles will mesh.

Columnist Robin Marriott meanwhile discusses the takeover by US group Principal Financial of Internos Global Investors. While wondering how US and UK styles will mix, Marriott writes: ‘It is admirable to see a company that started out in 2008 find a path to the next growth phase.’

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