After more than a century and a half in business – including becoming Belgium’s biggest listed developer – 2020 finds Immobel seeking out the big beasts of institutional finance and getting ‘woke’ about environmental, social and governance (ESG) issues.
Top of the to-do list this year is to begin the process of accessing the world of institutionalised finance, a habitat Immobel’s executive chairman Marnix Galle compares to a big game reserve.
This ambition constitutes a step change for the company and when PropertyEU catches up with Galle at the Urban Land Institute (ULI) conference in Amsterdam, we find a man on a mission. Big capital investors are being sought and Galle appears to be firmly in the driving seat. Last year, he decided to combine being chairman with the hands-on role of chief executive, under the new title of executive chairman. Investors reacted with approval, sending Immobel’s stock price up by 15% in only two months.
The company has a pipeline totalling more than one million m2 and a stock market capitalisation of around €750 mln. The portfolio spans six European countries with a focus upon residential and office, as well as hospitality and mixed use. Immobel is also active in land banking, holding 57 plots in Belgium. So was last year’s significant uptick in share price a sign the company was undervalued?
Immobel’s ambitious growth plan certainly connotes a belief that there is plenty of potential still in the tank. Galle, a high-energy talker, appears to think so. Work is well underway on enacting the strategy, he tells PropertyEU with a grin.
‘We are still a small institutional company in Europe, which is family-controlled in a public environment. We’re too big to be a small firm, but currently too small to be counted as a large company, so we have to upscale,’ he says.
‘We are doing this by creating strong local teams. Everything is in place for us to step up to a sustainable future. We want to become ever more professional by upscaling in different countries and to do that, we have to work on other people’s balance sheets.
‘One of our main activities is teaming up with institutional money and I think this is the necessary next step for us. Institutional markets are like a reserve; that’s the wonderful thing about them.
You just have to make sure you get in, which is hard work. Our strategic committee has given us five years to do this. We have given everyone KPIs, you can be sure of that!’
To understand the company’s bid for institutional finance, it helps to consider Immobel’s long history, which spans three centuries since its founding in 1863. The firm survived two world wars and in 1997 it co-developed the European Parliament building in Brussels, a potent symbol of the old continent’s efforts to guard peace after those two cataclysms. Landmarks include being the oldest company to be listed on the Belgian stock exchange.
Galle’s own involvement in Immobel is more recent, dating back to 2014 when his company Allfin took a 29.85% stake in Immobel. A year later he became chairman of the board and in 2016 Allfin and the Belgian firm merged. Although appearances suggest Immobel was the senior party in the merger, it can seem the other way around.
‘To understand the strategic moves we’re making, you have to understand we are a firm that is 150 years young, and we think in terms of being in the market for the next 100 years,’ Galle says. ‘We are looking for opportunities to create products which find investors and users throughout the cycles.
‘We have asked ourselves where we should be and where our clients will be, as buyers and users of real estate, and where we will have easiest access to these people and to financing through the cycles.’
Consolidating in mature, transparent markets appears to be one part of the answer. Simultaneously, there is a lessening focus upon Central and Eastern Europe, part of which was the €129.5 mln sale last year of the Cedat office building in Warsaw to Asian investor, GLL Real Estate Partners.
One particularly eye-catching new development is the residential asset ‘Eden’ in Frankfurt. Almost 200 metres high, it comprises 263 apartments with so-called ‘vertical gardens’ – greenery running up the sides of the property – in a nod to sustainability and aesthetic concerns.
On home ground in Brussels are the twin towers Möbius Tower and Möbius II – construction of which began last year. Allianz has purchased the asset. Comprising 34,000 m2 across 23 floors and 172 parking spaces, it is a speculative build.
‘We are consolidating our presence in Belgium, Germany, Luxembourg and France because we find these are mature, transparent markets and it is always easier to operate in markets with these qualities,’ says Galle.
Weight of history
Cutting-edge buildings designed with ESG in mind are an interesting development, coming from a firm steeped in tradition and founded when the state of Belgium was less than four decades old. Leading a company with this heritage incurs unique pressures, Galle admits. As Immobel sets sail for the waters of institutional finance, e and other executive managers carry a weight of history.
‘One cannot overestimate the psychological factors which come with this,’ he says. ‘When you are at a company which has been around for more than 150 years – basically because it hasn’t messed up – and is today the oldest company on the Belgian stock exchange, this gives you an enormous sense of public responsibility.
‘I had started my own company [Allfin] in 2001, and so when I and the new management came in to Immobel, taking over a company like Immobel, things went from being the ‘I’ and the very small ‘us’, to being about community, all our stakeholders and the long-term vision.
‘We also have public shareholders counting on us to have a great amount of compliance and good governance. This can sometimes slow down the development process because we go through a number of steps before we get to a decision.
‘That is why it is good to have this “brake system,” because it makes you think twice before you jump into the pool, without really knowing if it’s full or empty of water. It is an anti-short term way of looking at things.’
Galle is also cognisant of wider issues such as urban living challenges. The De Brouckère project in Brussels is aiming for zero carbon emissions, while in the same city the Lebeau asset employs geothermal insulation to cut energy usage in properties.
He says: ‘We [developers] have huge civic responsibilities and the real estate market as a whole has to act as a social valve for a number of things, one of which is accessible living in our cities. This is a must because otherwise things are going to explode. I believe that very strongly.’
Unsurprisingly, Galle is someone who backs market forces to drive solutions for these issues. ‘The fantastic thing that has developed is actually economical. We’ve been talking about sustainability for a decade now, since when people weren’t willing to pay for it and we were in a market where it was possible to do only a few limited things. But now that has changed and we’re in a market where sustainability is a necessity for users and buyers. So these market dynamics have brought ESG absolutely to the forefront.
‘The economic picture is changing and today you can justify doing good, since doing good is also good for your company. Sustainability is an issue that must be addressed and is in the economic equation. We’re in the process of working out our sustainability activities so that we can give them the proper resonance in our communities.’
It will be interesting to track in 2020 and beyond, how these 21st century concerns percolate through a company steeped in heritage, such as Immobel.