Germany’s Patrizia expects to boost its UK dealmaking by almost a third this year, after reshaping its local portfolio during the Covid-19 pandemic.
The UK team completed acquisitions and disposals valued at around £1bn during 2021, said Phil Irons (pictured), who joined the company 18 months ago as head of UK and Ireland transactions.
Roughly £700m of those deals were acquisitions, Irons added, mostly in the ‘beds and sheds’ space with some office purchases also completed. The remaining disposals saw the company exit a number of retail sites as well as some office investments, including the recently confirmed sale of Edinburgh’s Waverleygate scheme.
“Our strategy over the next 12 months is to invest circa £1.3bn, so 30% up on last year – and this year [will be] pretty much all acquisitions,” Irons told EG, adding that he hopes the team can complete deals on the behalf of as many as 17 Patrizia funds, up from nine in 2021. “There’s a growing demand within Patrizia for exposure to the UK, and I think that’s going to continue.”
Irons is watching the office market closely – deals last year in the capital included a purchase of the former hClub building, which Patrizia is now onsite redeveloping as a new London base. Irons admits to being somewhat perplexed by the resilience of London’s office market.
“We’re in this wonderful if slightly mad place at the moment,” he said of activity in the city. “If, pre-Covid, someone had said we’re going to get a global pandemic, everyone is going to work from home, and yet in two years’ time prime yields will come in 25, 50 basis points and rental growth will be at 5%, I’d have gone ‘you clearly have no idea what you’re talking about’. It makes no sense. There is no logic to it. And that is just the weight of global capital for London and the sustained demand for well-located, good quality buildings.”
Irons is keeping his mind open about further opportunities in the office market, but said the main focus this year in the UK will remain industrials and build-to-rent.
The company recently secured a further £600m for its last-mile logistics investment vehicle targeting refurbishment and development plays in Greater London. “The rental growth we’re seeing in that sector is unbelievable,” Irons said. And BTR will “remain a prime area of focus for us”, he added, highlighting the recent milestone for its pan-European Living Cities fund, which has now secured €1.5bn in equity.
At group level, Patrizia closed €7.6bn of deals in 2021, up by a quarter on 2020.
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