"We will still have the same people, the same processes, the same offices." February 2019

Nick+evans

TH Real Estate recently rebranded as Nuveen Real Estate, but the change won't have any real impact on the Asia Pacific Cities Fund available in Australia. Industry Moves speaks with executive director, head of real estate, Australia, Nick Evans about the rebrand, the group's plans for Australia and the global outlook for commercial real estate. He also explains what he loves about the asset class, as well as the four things that keep him up at night.

Can you explain the thinking behind the rebranding?

TH Real Estate renamed and rebranded as Nuveen Real Estate, in order to consolidate under the investment umbrella brand of ‘Nuveen’.

The rebrand reflects that we are part of a wider multi-asset management business with the additional support that brings, along with capital and expertise.

As Nuveen’s real estate platform, we represent one of the largest real estate investment managers in the world, with US$125 billion of assets under management, including listed securities.

It’s also a fresh start for the business, which previously operated under two legacy brands, and helps us to access other markets where Nuveen is better known.

Although our name has changed, our people and specialist expertise in global real estate remain the same. We have benefited from the support and scale of Nuveen’s investment platform and services for a number of years already.

How will the rebranding affect your funds' structure, if at all?

The re-brand does not affect the structure of any of our funds and strategies. We will still have the same people, the same processes, the same offices.

In November 2018, the firm launched the Asia Pacific Cities Fund which is the fourth fund in its global resilient cities series. The fund invests in selected ‘future-proof’ cities across the region, following the same investment theme adopted by the existing funds in the series.

The re-brand does not affect the structure of any of our funds and strategies.

What does the business aim to accomplish in Australia this year?

For 2019 and beyond, we remain wholly committed to our clients, partners and stakeholders in Australia and across the globe.

Our existing prime holdings in Australia include a 50 per cent stake in 101 Miller Street in Greenwood Plaza in North Sydney, investment management and development oversight for 183 Clarence Street and 275 George Street, Sydney, as well as investments in Myer Bourke Street in Melbourne, and a 75 per cent interest in Mount Ommaney Shopping Centre in Brisbane.

Going forward we will continue to support and expand our portfolio of sustainable and quality assets. We are also seeing strong interest in our growing local commercial real estate debt business, with increasing activity from local institutional investors.

Can you explain your local commercial real estate debt business a bit more and how you plan to grow it in Australia?

Pullback from the commercial real estate lending market by the Australian commercial banks has heightened the need for alternative funding sources, creating an opportunity for institutional investors and debt funds to grow within the market.

In late 2017 we appointed Martin Priestley, head of debt, Asia Pacific, to build our debt investment platform in Australia, complementing our existing and established team in the US and Europe.

In October 2018 we also appointed Nicholas Lim as analyst, debt strategies, in Australia, to support the continued growth of the Asia Pacific commercial real estate debt business.

Are you seeing more institutional interest in this segment of the property market?

Thanks to Martin and his team we have a healthy pipeline in place and saw more than A$2 billion of lending opportunities in commercial real estate in the first half of 2018 alone. We expect this interest to continue into 2019, with increasing activity from local institutional investors.

Across our global business, we are closing more than US$6 billion in commercial real estate loans annually, and we anticipate that the Australian market will continue to grow, based on our experience in both the UK and the US market.

We anticipate that the Australian market will continue to grow, based on our experience in both the UK and the US market.

What is your outlook for the commercial real estate market in australia and globally?

Globally, commercial real estate continues to attract new capital, with stable income returns generally exceeding those available in fixed income. With few exceptions, global real estate markets remain fundamentally very sound, compounded by many years of steadily improving economic conditions and rising occupier demand. While supply has also crept higher, excessive construction witnessed in previous boom-bust cycles has largely been constrained.

Still, a more uncertain global economic outlook will heighten the headwinds for global real estate investors this year, as newly developing risks – from a no-deal Brexit to renewed tensions with North Korea – add to existing risks such as trade conflicts between the US and China. As global interest rates rise amid slower economic growth, near-to-medium term risk-adjusted returns are also likely to stay sub-par, even as valuations may well remain supported.

Now is not a time to throw caution to the wind. In this environment, a focused strategy is required to generate attractive long-term portfolio returns. Over the long term, our advice remains to invest across cycles, looking past short-term volatility into structurally-strong cities and markets. In the near term, we believe investors should stay tactically nimble through smart stock selection.

Australian cities rank highly among the selected cities we advise our clients to invest in within the Asia Pacific. We see potential upside from the Brisbane market over the next few years as the economy steps up, helped by recovering commodities markets and infrastructure spending. We believe the Brisbane office market is on the cusp of a multi-year super cycle, with vacancies expected to be driven lower by rising employment after several years of falling rents.

Selective positioning in the Sydney and Melbourne markets can also add value to portfolios by providing diversification into some of the most liquid and institutional markets in the Asia Pacific. As competition for Sydney office assets stays tight, we expect the Melbourne market to heat up and outperform in the medium term supported by strong working age population growth.

You’ve been in real estate investment for some time, what do you love about it (and what don’t you like about it)?

I love being able to travel and the tangible nature of property, as well as interacting with smart, engaging colleagues and industry participants and proud to be able to provide our investors with security in their retirement. What I dislike are the sometimes-inflated egos associated with our industry and time away from family. Overall, I consider myself very fortunate to work in our industry which is full of characters.

What advice would you give your 21-year-old self?

Travel more; learn from those that have been in the industry for a number of years; always be humble in your approach; and put your hand up and volunteer for all opportunities that come your way - if you don’t know how to do it, learn how to do it.

What keeps you awake at night?

Personally, my three daughters, who are all under five. Professionally, ensuring that our clients’ interests are being well looked after.

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