The extra mile(stones)

We are celebrating yet another milestone at the Kempen Property Team: the 2017 edition next week will be the 15th European Property Seminar in Amsterdam! But this is far from the only reason why 2017 is a special year. As interest rates policies became increasingly accommodative over in recent years, markets got more comfortable with this new reality and rather started to consider the beginning of the unwinding of said policies as the new uncharted territory. And this is exactly where we are: after years of QE and declining rates, the US have started hiking rates, while speculation on the UK following suit has been rife and only delayed by the uncertainty around Brexit. If the period post crisis has been benign to all sectors, it has been even more beneficial to real estate.

Ever declining interest costs have benefitted property companies in more ways than one, as the rising tide of external growth and falling interest costs has supported EPS/NAV growth even for more leaky boats. Yet, marginal funding costs are now close to in-place interest costs for many businesses and although opportunities for external growth are open to more companies again after the 8% rise in share prices to date, with the end of the “lower forever” wave nearing, fundamental knowledge and analysis is now far more important than in previous years.

At the Kempen & Co European Property Seminar, next to the biggest companies in the industry you will also meet hand-picked under-the-radar companies. Market caps at our seminar range from €200m to €23bn, with a median of €1.9bn, totaling over €180bn. An excellent opportunity to swap notes with like-minded investors who also look for companies inside and outside the blue chip environment. Investors who realise you need to invest not just cash, but also time and energy if you are to uncover the gems, thus go the extra mile.

In the end, real estate remains a local business, built around a tightly knit community. It is local because what drives returns is income and growth and in order to get that, quality of assets and management are key. And quality is determined at the micro level, which means, you have to be as close to the action as you can. Also, not only is real estate a long term asset class, but people tend to stick around for a long time: looking back to our first (one day) conference at the Amsterdam Zuidas in 2003, you would be surprised to see how many of you we will be meeting up with again in a week’s time - both on the corporate and on the investor side. Real Estate is at the heart of what we do at Kempen, and like real estate, we are in it for the long run, even 20 years for me this August!

This article was originally posted on LinkedIn. 

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Vincent Willink