Creating comfort in cross-border capital allocation
Andrew Belt, PATRIZIA Corporate Communications thought leadership lead, speaks to PATRIZIA Head of Strategic Asset Mandates Bertie Norman about her role and the standout features of managing cross-border capital, which may differ from the more traditional institutional investment management.
Ever since the invention of money by the Chinese in 1000 BC, there has been a need to look after it. Whether stored at home, in iron cash boxes as became common in the 18th century or locked in vaults behind impenetrable steel doors by banks, looking after currency has been a common feature of life for thousands of years.
In the digital age, money has taken on a less physical form, with apps storing our assets in the ‘cloud’. On a grand scale, investment vehicles present other ways of storing money, albeit on the presumption that the monetary value will increase over time. When it comes to real assets investing, that illiquidity takes the form of something tangible and real again.
For decades, investors have turned to real assets for portfolio diversification and bets on outperforming the various liquid options available to them. Investors’ market knowledge and that of the managers they enlist is vital to making the right decisions. More recently, the desire for real assets investment diversification has seen capital cross borders into literal unchartered territory.
So, given the laser-like focus we humans naturally have when it comes to where we place our money, what extra assurances are needed to convince clients that they should invest overseas, often in continents of which they have no prior experience?
Know your client
Bertie Norman should know. As Head of Strategic Asset Mandates at PATRIZIA, she leads a team of more than 20 colleagues in delivering projects in Europe on behalf of clients mostly based in Asia.
“Understanding the client is paramount,” she states. “We need to know the client like the back of our hands. Really, they are client mandates rather than asset mandates. Real estate is an emotional topic and we are with our clients every step of the way during the mandate journey.
“We have to work out how to tailor our solutions for every client. This is not like working with traditional institutional investors.”
- Bertie Norman, Head of Strategic Asset Mandates at PATRIZIA
‘Global platform, local approach’
PATRIZIA’s strategic asset mandate journey began in 2015 when acquiring the iconic Madame Tussauds wax museum in London as part of a single asset mandate. Since then, the company has won a further nine mandates in Germany, the UK and Belgium, growing its assets under management (AUM) in this workstream to around EUR 2 billion.
“It’s a tailored-to-suit product,” Bertie explains. “We provide a one-stop shop solution. Our clients shouldn’t need to understand real estate. They can sit in Hong Kong and can have full confidence and comfort in PATRIZIA’s ‘boots on the ground’ working for them.
“We have a global platform, supported by a local approach. It’s a competitive fee service that we offer, leveraging the PATRIZIA platform.”
Typically, a core team of four PATRIZIA professionals is allocated per project, across Fund Management, Asset Management, Fund Operations and, where needed, Real Estate Development with support from the local Global Client Solutions team. “It’s a dedicated team to provide a tailored service for clients,” Bertie reflects.
Value-add projects
In October, the company secured its latest mandate – a strategic repositioning mandate for Pinners Hall – an iconic office building in the City of London. Here, PATRIZIA will draw upon its Real Estate Development team to deliver a best-in-class office asset, with the project upping the firm’s London office portfolio AUM to EUR 1.6 billion and becoming the latest addition to its EUR 2.5+ billion pan-European value-add programme for international clients.
European appeal for Asian clients
The target now for the team is to win one mandate per year, providing bespoke solutions as part of this growing area of the business. For this, PATRIZIA’s presence in Asia is essential. Of the nine mandates it manages (Astro Tower was disposed of in 2021, gaining a record yield in the Brussels market), eight are carried out on behalf of Asian investors.
“As part of our global offering, we have colleagues who can speak natively to our Asian investors,” Bertie says. “We have Suengtak (Lee – Managing Director – Capital Markets APAC) and Steve (Nam – Associate Director – CM International/Korea) in South Korea, Wendy (Lai – Director – Capital Markets APAC) in Hong Kong and Thomas (Hirschvogel – Managing Director – Fund Management Real Estate Value Add) and Masami (Takizawa – Director – Capital Markets APAC) in Tokyo, who can better address the needs and concerns of our investors, which can then be conveyed to the rest of the team. This is a huge strength of PATRIZIA’s.”
So, what exactly is the appeal of European real estate for Asian investors? Bertie says diversification is key here. “Historically, it’s been a global diversification play,” she explains. “Capital has mainly focused on London before further European expansion. In this way, London is the portal to Europe for our Asian investors. This is reflective of cultural ties to the UK. The UK is viewed as a safe haven and transparent marketplace. There is comfort around the stable, global importance of the UK and London.”
And will this Asia-to-Europe deal flow remain the template for future growth? Yes, Asia will remain as the client focus for her team, Bertie confirms.
The hope is that our relationships with Asian clients continue to strengthen and grow as PATRIZIA’s one-stop shop capabilities become better known in the region. The cross-border understanding and relationships remain a fascinating part of the mandates, as Bertie highlights.