Lack of operational expertise has become the key risk component for real estate companies, according to Patrick Kanters, Managing Director for Global Real Estate at APG Asset Management.
Lack of operational expertise has become the key risk component for real estate companies, according to Patrick Kanters, Managing Director for Global Real Estate at APG Asset Management.
'Operational skill is the key factor driving real estate companies forward. Financial engineering is over.'
Kanters made the comment during a panel discussion at EPRA's Insight event in Amsterdam this week. Bart Gysens, analyst at US investment bank Morgan Stanley, agreed that operational real estate is returning rather than financial engineering and added that operational expertise is particularly important in the retail sector.
'Operational gearing makes sense for shopping centres, not financial gearing. But the operational risk is significantly higher and requires more expertise,' he noted. 'If companies have difficult attracting financing, management teams have to show they can add value in a different way...that’s what Derwent London and Shaftesbury have been doing for generations.'
By contrast, there is little operational risk in the German residential sector, Gysens argued. 'This is a financially driven sector.'
