DTZ Investors (Real Estate) - Overview (2024)

Corporate overview

DTZ Investors (DTZI) is a specialist asset manager with a 50-year track record of creating value for clients across global real estate markets. DTZI manages €13bn ($14bn) of assets for a range of high-profile institutional investor clients. With a team of over 100 personnel in its main offices in London, Paris and Tokyo, DTZI offers multiple real estate investment solutions for clients including commingled funds, separate accounts, club deals and fund-of-funds.

Investment principles & strategy

DTZI generates long-term superior returns for clients by customising an integrated service that marries their investment objectives with a detailed knowledge of real estate markets, responsible investment and the value-creation process. Our approach relies on five key beliefs:

Act responsibly – We take responsibility for delivering on our clients’ return objectives within their risk parameters through a customised approach that marries global investment know-how with local market expertise. Our responsible investment philosophy combines environmental and wider societal benefits with financial returns that are assessed over the very long term.

Take controllable risks – We have strong processes to identify, price and manage risk. We assess returns at an asset level and balance risk at the portfolio level. We avoid location and credit risk and take on leasing and obsolescence risk that can be priced and managed.

Persistence pays – Strong processes and detailed due diligence avoid mistakes, secure value and ensure liquidity in portfolios. We marry strong processes with a two-stage governance process that assesses price and risk on all transactions over the very long term.

Generate value through active management – We operate vertically integrated teams that understand building design, occupier need and asset potential to engineer value. We marry this with a deep knowledge of the capital markets to determine how best to finance value creation.

Sell well – A strong sell-discipline is essential in understanding when an asset’s place is no longer justified in a portfolio. Through a combination of investment process and governance, we constantly review our sales process to crystallise returns or mitigate risks.

Sector forecasts

  • We expect the current economic conditions will weigh on the commercial property market this year. The high inflation, high interest rate environment will lead to softer occupier and investment activity. Higher gilt yields will also pressure on equivalent yields and capital returns leading to income-derived performance for 2023.
  • The property sectors expected to perform best over the next five years will be those underpinned by strong rental growth, healthy income returns and positive long-term structural trends, these include: retail warehouses, supermarkets, industrials and a number of the alternative sectors.

INDUSTRIAL:

  • Weaker economic activity and increased speculative supply will cause rental values to slow across Europe in 2023.
  • Beyond 2023, we expect the growth in e-commerce and on-shoring will support demand and rental growth, enabling the sector to outperform the other sectors over the next five years.
  • Modern, operationally efficient estates that are situated within final-kilometre destinations of consumers will remain highly preferable to occupiers and should reward investors with more sustainable performance over time.

OFFICE:

  • The office sector will underperform the other property sectors as a cooler labour market, hybrid working practices and tighter net-zero requirements adversely affect occupancy and investment demand for poorer quality offices.
  • The commitment of corporates to more stringent net-zero targets will raise the requirements for well-located, high-quality, ESG-compliant buildings from occupiers, leading to the emergence of a two-tier office market.

RESIDENTIAL:

  • The residential and multifamily sectors should offer stable income and positive income growth where demographics are compelling; Europe’s ageing population will continue to support occupier demand in the senior living sector. The shortage of high-quality, convenient and well-connected urban accommodation for the young across Europe’s major cities should support the performance of PBSA.

RETAIL:

  • Reduced consumer confidence and increased living costs will weigh on disposable incomes and retail sales in 2023. However, the sector will continue to deliver strong performance for investors due to above average income returns.
  • The best performing retail segments over the next few years will be the essential-led segments (retail parks and supermarkets).

ALTERNATIVES:

  • The alternative sectors will remain in high demand from investors in search of portfolio diversification and higher returns. Investors should be prepared to take on more operational risk to earn better returns.
  • Alternatives such as car parks and data centres are still favoured for their long-dated cashflows and operator credit quality, while the prospects for hotels look appealing following the recovery in international tourism.

Strategic corporate development

We continue to develop our business to meet the needs of our clients. Development comprises geographic platform expansion, service lines, sectors and investment products.

We continue to focus on the 30 principal urban economic centres that dominate the European real estate markets. Our non-domestic clients have a requirement for complex, bundled services on large scale assets in these markets.

We will continue to focus on real estate development, particularly in growth markets where technology is driving demand for a new type of real estate that is more flexible than current stock. This will extend our recent investment programmes in logistics and urban living. We will continue to partner with best-in-class operators in these markets where appropriate.

We expect the market dislocation caused by the economic crisis to create real opportunity for value-add investors who need an active manager to assemble portfolios of scale and manage to core over the mid-term. We will align our capital with such like-minded investors.

We are committed to reducing our own and our sector’s impact on the environment. We will continue to develop our responsible investment programme, working with agencies such as the PRI, GRESB, IIGCC, TCFD and Better Buildings Partnership to deliver transparent improvements to our managed portfolios.

Performance verification

Our UK track record is benchmarked against the MSCI Index and is compliant with the Global Investment Performance Standards (GIPS). In the UK we have an exceptional performance track record; we have won 17 prestigious MSCI performance awards since 2000 and we also received an award for the top performing fund on a 10-year basis in the UK and we were the winner of the European long-term risk-adjusted relative return award in 2023. Our house performance has beaten the MSCI benchmark by 1.6% pa on average over the past 10 years to December 2022. In Continental Europe, we won the ‘Pierre d’Or’ as Best Asset Manager of the year and the European Pensions award for Best Asset Manager reflecting our work for a range of value-add strategies in offices, residential and logistics.

COMPLIANCE STATEMENT

DTZ Investors complies with applicable laws and regulations. The firm operates a Global Code of Ethics for its businesses that includes its investment and asset management operations. The Board establishes the compliance framework for its entities and is implemented by Senior Management. In addition, the Group Compliance Manager works to ensure compliance of the firm’s regulated activities and retains third-party auditors to monitor compliance.

As an expert in the field of real estate investment and asset management, I can provide a comprehensive analysis of the corporate overview, investment principles, strategy, sector forecasts, and strategic corporate development outlined in the article related to DTZ Investors (DTZI).

Corporate Overview: DTZ Investors is a specialist asset manager with a remarkable 50-year track record in creating value for clients across global real estate markets. Managing a substantial €13 billion ($14 billion) in assets, DTZI serves a diverse range of high-profile institutional investor clients. The company operates with a team of over 100 personnel in its main offices located in London, Paris, and Tokyo. DTZI offers various real estate investment solutions, including commingled funds, separate accounts, club deals, and fund-of-funds.

Investment Principles & Strategy: DTZI's investment approach revolves around five key beliefs:

  1. Act Responsibly: The firm prioritizes responsible investment, combining environmental and societal benefits with financial returns over the long term.

  2. Take Controllable Risks: DTZI employs robust processes to identify, price, and manage risks, avoiding location and credit risk while embracing leasing and obsolescence risk.

  3. Persistence Pays: The company emphasizes strong processes and detailed due diligence to prevent mistakes, secure value, and ensure liquidity in portfolios.

  4. Generate Value Through Active Management: DTZI operates vertically integrated teams with deep knowledge of building design, occupier needs, and capital markets to drive value creation.

  5. Sell Well: A strong sell-discipline is crucial in recognizing when an asset's place is no longer justified in a portfolio. Continuous review of the sales process is undertaken to crystallize returns or mitigate risks.

Sector Forecasts: DTZI's outlook for the real estate market suggests that the current economic conditions may impact the commercial property market in the coming year. Different sectors are expected to perform differently:

  • Industrial Sector: While economic challenges may slow rental values in 2023, the growth in e-commerce and on-shoring is anticipated to support demand and rental growth beyond 2023.

  • Office Sector: Expected to underperform due to a cooler labor market, hybrid working practices, and stricter net-zero requirements.

  • Residential Sector: The residential and multifamily sectors are expected to offer stable income and positive growth, particularly in the senior living sector due to Europe's ageing population.

  • Retail Sector: Despite challenges like reduced consumer confidence, essential-led segments such as retail parks and supermarkets are expected to deliver strong performance.

  • Alternative Sectors: High demand is predicted for alternative sectors like car parks and data centers, offering portfolio diversification and higher returns.

Strategic Corporate Development: DTZI is committed to developing its business to meet client needs. This involves geographic platform expansion, service line diversification, sector focus, and investment product innovation. The company continues to focus on principal urban economic centers in Europe, with a particular emphasis on real estate development in growth markets driven by technology. The market dislocation caused by the economic crisis is seen as an opportunity for value-add investors, and DTZI aims to align its capital with such investors while reducing its environmental impact through responsible investment programs.

Performance Verification: DTZI's performance is benchmarked against the MSCI Index, and it complies with the Global Investment Performance Standards (GIPS). The firm has a notable track record, having won numerous MSCI performance awards and European accolades, reflecting its success in offices, residential, and logistics.

Compliance Statement: DTZ Investors complies with applicable laws and regulations, operating under a Global Code of Ethics. The firm's compliance framework is established by the Board and implemented by Senior Management. A dedicated Group Compliance Manager ensures adherence to regulations, and third-party auditors are engaged to monitor compliance.

In summary, DTZ Investors exhibits a robust and strategic approach to real estate investment and asset management, backed by a substantial track record and a commitment to responsible investment practices.

DTZ Investors (Real Estate) - Overview (2024)

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