MAPFRE and Macquarie met with key investors from the real estate sector
MAPFRE, through MAPFRE Inmuebles, and Macquarie, met with key investors from the real estate sector at Fundación MAPFRE’s headquarters in Madrid. MAPFRE and the Australia-based giant jointly launched a real estate fund and an infrastructure fund between 2018 and 2020. Now they are in the process of raising capital for a new vehicle that will invest in offices.
At the event–opened and closed by MAPFRE Inmuebles General Manager Alfredo Muñoz–Gonzalo de Cadenas-Santiago, Director of Macroeconomic and Financial Analysis at MAPFRE Economics, gave an initial reading of the macroeconomic context, commenting that “real estate assets are considered safe-haven assets during times of high inflation.” However, he warned that we cannot know with certainty "what is going to happen in a scenario in which liquidity restrictions have begun to emerge." Although this crisis isn’t as drastic as what happened with Lehman Brothers, he said, “the world will never be the same, and we will inevitably have structurally higher inflation, at rates close to 4% in 2030.”
Juan Caño, Iberian Peninsula supervisor at Macquarie Asset Management, also agreed with this prediction and reviewed the infrastructure sector, another asset that, in his opinion, "performs very well with high inflation." In fact, MAPFRE began its venture in this sector with a fund of Macquarie funds in September 2020.
Meanwhile, JLL, a world leader in real estate consulting and services for professionals, analyzed the real estate market in Europe, emphasizing the growing importance of incorporating ESG (environmental, social and governance) criteria. "Only 9% of the stock in Madrid and Barcelona are grade A (top quality), when they are the ones that are going to perform best in the most volatile times, such as right now," said Paola Erhardt, supervisor of JLL's Capital Markets office. The expert said that "it's impossible to maintain the current returns with the tightening of financial conditions that’s taking place" and that, as she pointed out, "price adjustments of between 3% and 8% have already begun to occur in all transactions completed before the summer."
It is an price adjustment (and, by extension, a yield adjustment) that according to all participants, will occur to a greater or lesser extent. However, as the representatives of Colliers, Saint Croix Socimi and Colonial pointed out at the "Real Estate Trends" roundtable, moderated by Christian Göbel, co-head for EMEA Real Estate at Macquarie, there are still opportunities, even if "we have to think about more complex structures to obtain the desired yields."
However, Carlos Díaz, deputy general manager of MAPFRE Inmuebles, in charge of moderating the final roundtable with investors, wanted to clarify why MAPFRE's portfolio is facing the upcoming context from a more solid position. The fact is that it has only invested in prime office buildings in the main European capitals, with very stable tenants. "A few years ago, we changed our strategy and started indirect investment in real estate. The goal was to diversify the real estate assets, and to do that we had to partner with the best local social partners wherever we go, which is key for us," he said.
Such is the quality of the alternative asset funds launched by MAPFRE since 2018 (not only with Macquarie, but also with Swiss Life or Munich Re) that many Spanish insurers have decided to join as shareholders. Catalana Occidente, Mutualidad de la Abogacía and Hermandad de Arquitectos, three of the major shareholders of MAPFRE and Macquarie's real estate funds, participated in this final conference roundtable. "MAPFRE presented us with the opportunity to diversify our real estate assets geographically," said Oscar Andel, director of real estate investments at Catalana Occidente. "We have similar investment policies and MAPFRE gave us the option to reach out to those local partners in international markets," added Carlos Perez, director of real estate investments at Mutualidad de la Abogacía. Finally, Julián Moreno, his counterpart at Hermandad de Arquitectos, highlighted "the confidence and peace of mind that MAPFRE's project gives them in pursuing a similar objective."
The insurance companies’ investment policy is very conservative, as Alfredo Múñoz pointed out at the closing ceremony, which enables him look to the future with more optimism. "We know we’re in for a bumpy ride and that the economy is going to face problems in general–there is even talk that we have been in a permanent crisis for years–, but we will continue to look for opportunities with the usual caution, putting ourselves in the hands of those who know best and always looking to the long term," he concluded.
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