The pandemic has led to a growing recognition among landlords that real estate investing is no longer just a purely transactional exercise. It also involves a crucial operational element.
“All real estate is in fact operational,” Sophie van Oosterom, global head of real estate at Schroders Capital, the London-headquartered asset manager, said during a panel at the firm’s inaugural Private Assets Media Summit held virtually on 7 June.
She said landlords have realised that they ultimately also own the risk of their tenants’ businesses doing well.
“The last 18 months have shown you can’t sign a lease contract and sit back,” she said. “Landlords need to think through business models to make their assets successful, strike partnerships with tenants and make sure their assets provide the services that tenants require, with minimum waste of resources.”
As she highlighted, the ‘operational element’ in real estate would include, among other things, being at the forefront of understanding ESG drivers, interpreting the regulations, driving sustainable income of the buildings, as well as providing the right services to the tenants to ensure the assets are relevant to their needs. It would also involve being flexible about the lease contracts that can appropriately fit tenants’ needs.
“There is a hospitality mindset required within the real estate sector to think through the tenant needs, how to service stakeholders and [also] do it in a way that serves our fiduciary responsibility,” she said.
Van Oosterom joined Schroders in January this year to oversee growth of the firm’s direct and indirect real estate business after Duncan Owen moved on to the role of a special adviser. An industry veteran with decades of experience, van Oosterom was previously chief executive and chief investment officer of EMEA for Los Angeles-based CBRE Global Investors, where she led all the operations, investment strategy, performance underwriting and programme development in the region.
Schroders also announced a strategic overhaul last week. In a statement issued on 7 June, the firm announced that all specialist private asset investment capabilities will now be unified under a single brand called Schroders Capital that cumulatively will manage $65 billion in assets. Schroders Capital will encompass the firm’s businesses in private equity, securitised products and asset-based finance, private debt, real estate, infrastructure, insurance-linked securities, along with its majority stake in impact investment specialist Blue Orchard.
Georg Wunderlin, global head of Schroders Capital, said this move will “increase the visibility and strengthen the position of the firm’s private assets offering while also underscoring its ambitions as a leading player in private markets”.