It’s long concerned a certain type of music fan, film-goer or fashionista: when does alternative become mainstream? Given the heat today around alternative assets, investors should concern themselves, too.
Do many alternative investments really still merit the tag? From PRUPIM’s plunge into the private-rented sector last week, to the student accommodation universe that continues to swell, what were once alternative choices are beginning to look decidedly mainstream.
This week, Los Angeles-based investment manager Oaktree Capital Management joined the fray. It is investing more than £300m in a start-up serviced apartment company with the aim of building a sizeable portfolio, its first major investment in the UK sector. No doubt it wants to repeat the success of one of its earlier alternative plays. Knightsbridge Student Housing, Oaktree’s 2010 launch, is working towards establishing a £1bn portfolio.
Legal & General is making similar noises. Interviewed on stage at the latest EG/Profile Network Face to Face this week, Bill Hughes, head of L&G Property, confirmed his increased appetite for alternative assets. He wants to move the proportion of funds he allocates to alternatives from 5% to 20-25% of L&G’s assets under management in pretty short order. Given that he also intends to double the size of the firm’s £10bn portfolio within as few as five years, alternatives could represent a £4bn play by L&G alone. Others, no doubt, have similar ambitions.
If that comes to pass, then the alternative asset class would be anything but.
Long-time EG columnist John Gummer makes a welcome one-off return to our comment pages this week to talk about Margaret Thatcher’s legacy. A member of her Cabinet for many years – and a former Conservative party chairman – he writes: “The restoration of the British economy, the recovery of our pride, the return of our self-respect and our self-belief – this was her task and this her achievement.”
Elsewhere, Sir John Ritblat and Sir George Iacobescu explain just how profound her impact was on London property, although as Urban&Civic’s Nigel Hugill concedes: “The consequences for the rest of the country are obviously less clear-cut.” No doubt large parts of the property industry will fall silent at 11am next Wednesday.
So Ping An is to buy the Lloyd’s of London building, EC3, for around £260m. And who is Ping An, you ask? Well, its parent company has assets of around £300bn. It’s ranked number 100 in Forbes’ Global 2000 league table and number 78 in WPP Millward Brown’s BrandZ Top 100 Most Valuable Global Brands. Not bad for a company you had never heard of. And its vision? “To become a global leading integrated financial services group”. More significantly, it’s not alone. The Chinese are coming.
Taken at face value, Westfield’s proposal to extend its mall in White City, W12, to include a replica city where children can role-play working life reads like a belated April Fool’s joke. Creating an extra 40,000 sq ft of space for M&S will fund a 75,000 sq ft mock city for children.
And what does that mean? “Children can attend ‘university’ and graduate to ‘work’ in a job of their choice, earning credits. The credits are kept in a child’s individual bank account and can be used to pay for activities or buy products or services within the facility”.
Unless those options focus disproportionately on careers as a professional footballer or pop star (not developer, surely), it all sounds laudable and not a little bizarre, although I’ll reserve judgment for now: Westfield has a habit of making this sort of thing work.
