Although it was never a conscious decision, the fact that the DWS real estate fund Europe II is managed by three female fund managers has become “a thing,” notes Jessica Hardman of DWS. “There is still a lot to be done if the real estate and investment industry is to be open to the fact that you can pursue a career path in the industry regardless of your colour, gender or origin.“
She says this in conversation with Investment Officer’s Dutch sister publication Fondsnieuws. Hardman is responsible for European real estate portfolio management at DWS.
She hears calls from both the business and investment communities to address the imbalance in the industry. “But that won’t happen overnight. It requires more diversity at the grassroots level, so that the pool of available people, men and women, includes people of different skin colours and social backgrounds.”
Much of the change, she says, must come from within the fund houses. “People see me, see Nicoletta (De Bona Bottegal, lead portfolio manager of Europe II) and realise: hey, that could also be a next step for me in my career,” she explains. ”That’s something the industry should propagate more.”
All women
Her total real estate team numbers fourteen people, male and female. But, specifically, it is the DWS Europe II fund which is being run by three women. The fund was set up three years ago as an institutional variant of the previously-existing real estate fund for retail investors. With the 600 million euros raised, it bought European real estate, mainly residential and logistics. The gross value of the property is now around 1 billion.
“When we were looking for the best people for the fund 3.5 years ago, we ended up with Nicoletta De Bona Bottegal, a strong Europe specialist,” said Hardman. “She was the best internal candidate for the spot.”
“The same goes for Astrid Galy, the assistant portfolio manager we hired a year later and the third fund manager we recently hired because of the fund’s strong growth, “Hardman added. “All women.” She noted with a hint of irony: “Apparently, an “all female” portfolio management team is remarkable.”
Multipliers
“As a portfolio manager, you are a project manager,” she said. ”You deal with different assets and stakeholders, have to organise a fund, set up a strategy.”
“Many of those skills fit well with women,” Hardman continues. “We are multipliers” This leads to more and more female talent penetrating the portfolio management industry, she explained. “But that needs to be encouraged.”
The industry is making strides in that area, she agrees, but there remains work to be done since there are still no 50/50 organisations. DWS isn’t one either. Fortunately, she says, the time is definitely over when a female fund manager gets different buying opportunities from a male one. “I should hope that nobody works that way anymore,” she says. If that were the case, such a company would not survive in current times,” specifies.
Buying Opportunities
As for buying opportunities, Hardman says that DWS has further expanded its assets under management (AuM) in the residential sector and expects to make more strides. “In European residential real estate, there is institutionalisation, thanks to increased demand,” she stated. “You can see this happening particularly in Germany, the Netherlands and the Nordics, but there are also increasing opportunities for foreign investors in Spain, the United Kingdom and Ireland.”
Investing in suburbs is particularly promising, according to the real estate investor, now that people worldwide are working more from home and are adjusting their housing requirements accordingly. With the work-life balance shifting more towards the private sphere, living space has suddenly become more important and travel time less so.: “We will probably double our invested assets in this category compared to the situation before the pandemic,” said Hardman. “It’s a good theme to invest in.”
The choice of residential real estate does not seem all that surprising, as Europe II has been long on residential real estate and logistics since the start. Yet in the long run it doesn’t have to stay that way, Hardman acknowledges. “The starting point is to be and remain diversified,” she said. “Perhaps offices will become more interesting again in the future, especially if they are ESG-friendly offices or properties that are in line with the future way of working.” She adds: “That could well change the weightings within the fund a bit, putting less emphasis on residential.”
Better stay away
Speaking of ESG, Hardman sees particular opportunity in that area with affordable, environmentally-friendly housing and those that focus on high air quality. “All metropolises have air quality problems and it is seen as the biggest problem in the world,” she explained. “We can primarily influence air quality in properties, but we can also do things outside, such as investing in electric car charging stations and biodiversity.”
When asked what real estate investors should avoid, Hardman mentions the struggling retail sector. “That’s one you need to start rethinking as an investor, especially how the next generation will shop and how physical shops are able establish their place in it.” She says key factors will include: “More local, but character and the ability to shop outside”, adding: “But also look at shops that respond to the renewed and more diverse day and night rhythms that people have today.”
Europe II
AuM: 1.1 bn euro (GAV)
2020 Total Return: 6.4%
Total Return Benchmark: 0.1%
2020 Income Yield: 3.0%
Income Yield Benchmark: 3.0%
Total Return since inception: 7.0%