In a low interest rate environment, this strategy offers investors the ability to access a range of specific European markets and growth sectors. The strategy targets long-term, relatively stable income and capital growth.
There is a focus on high-quality assets in prime locations. We aim to capture opportunities in a range of markets, which provide different return profiles due to varied positions in the occupier and investment market cycles.
The strategy aims to provide a diversified total return composed of a steady distribution yield and capital growth. Specifically, a long-term net target total return of c. 6-7% p.a.
Invesco Real Estate’s investment philosophy comprises two fundamental principles: (1) maximize the predictability and consistency of investment returns and (2) minimize the risk of capital loss.
To implement this, we have developed a disciplined, team-based system that has yielded consistent results and has the potential to be reproduced over varying phases of the real estate investment cycle.
The strategy currently targets eight countries within our qualified investment universe, as defined by our 'House View'. The countries are the UK, France, Germany, Poland, Spain, Sweden, Italy, and the Netherlands.
We believe eight countries provide the optimal relationship between diversification and structuring complexity. The investment team remains active in reviewing its geographic and sector allocation to ensure it provides an optimal composition of assets that align with the strategy of the fund and deliver results.
While each mandate is based on defined investment objectives, the foundation of our investment process consists of three interactive phases, namely: strategic planning, operational execution and performance evaluation.
Extensive market coverage
Invesco Real Estate has 582 employees worldwide, based in 21 offices across 16 countries (as of 31 December 2021). Our European business has professionals working in acquisitions, asset management, research and portfolio management. They are based in seven offices across the region. This gives us ‘boots-on-the-ground’ across the target investment markets.
We believe our in-depth knowledge about the regional markets and local presence enhances our ability to source off-market deals and execution capabilities.
Experienced team
We believe our investment team represents one of the most skilled, stable and experienced groups in the real estate investment business. Our global senior management team has an average tenure of 15 years at Invesco and 27 years of industry experience.
The team has had extensive experience managing a variety of investments across multiple market cycles. This collective experience will be brought to bear in the screening, selection and execution of investment strategies for our clients.
Deep local relationships
Invesco Real Estate possesses a significant competitive advantage in sourcing transactions, much of which is proprietary in nature. Our team of experienced investment professionals has developed a ‘quality of capital’ reputation that provides sellers with certainty of close.
We believe our ability to access attractive, off-market opportunities for our clients arises from our broad investment capabilities and strong reputation in the market.
We operate a cross-functional team philosophy with highly skilled investment teams being used on a variety of different mandates.
For example, the transaction team in Paris is responsible for acquiring assets for all our mandates which invest in France. The result is that IRE has teams of specialists rather than generalists, which adds more value to the investment process.
The exception is the portfolio management team and fund operations team where individuals are dedicated to specific accounts.
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Real estate 2024 investment outlook
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The value of investments and any income will fluctuate (this may partly be the result of exchange-rate fluctuations) and investors may not get back the full amount invested.
Property and land can be difficult to sell, so investors may not be able to sell such investments when they want to. The value of property is generally a matter of an independent valuer’s opinion and may not be realised. Real estate investments are typically non listed on regulated markets and need to be valued via the application of appropriate models (potentially applied by independent experts). This may lead to inaccurate valuations which may not be reflected into transaction prices. Changes in interest rates, rental yields and general economic conditions may result in fluctuations in the value of the strategy. Real estate investments are exposed to counterparty risk, which is the risk that a counterpart is unable to deal with its obligations. The strategy may use derivatives (complex instruments) and borrowings, which may result in the strategy being significantly leveraged and may result in large fluctuations in the value of the strategy. Real estate investments can be exposed to new sustainability-related regulatory requirements that may negatively affect the value of those assets which are not compliant and can envisage significant costs to be invested to comply or to simply improve their sustainability profile. In addition, real estate investments can be also significantly exposed to negative economic effects stemming from climate change, natural disasters and the general preference of investors for assets with better sustainability features.
All data is provided as at 31 December 2021, sourced from Invesco, unless otherwise stated.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.
This document does not form part of any prospectus. It contains general information only and does not take into account individual objectives, taxation position or individual financial needs. It does not constitute a recommendation of the suitability of any investment strategy for a particular investor. Nor does it constitute an offer or solicitation by anyone in any jurisdiction in which such an offer is not authorised or to any person to whom it is unlawful to make such an offer or solicitation.
