DWS’s Jessica Hardman on business as usual in a Brexit environment

Jessica Hardman, head of the real estate group for UK & Ireland at DWS, has been with the firm for 15 years and has quite the track record of deals to look back on. Over the past five years, she has been involved in more than £5bn of real estate transactions, including the sale of 30 Gresham Street, EC2, by Samsung Life Insurance to Wing Tai Properties and Manhattan Garments Group. DWS is currently targeting acquisitions in emerging locations within major cities across Europe and the UK. Its German open-ended funds, which are seeing healthy inflows of capital, are in acquisition mode, despite the relative inertia caused by Brexit negotiations in the UK. DWS is still investing in the UK too, albeit selectively. Earlier this month, it agreed to forward-fund a 599-bed student accommodation development in Wembley, north-west London, for £90m for Watkin Jones. The firm has also been in talks over acquiring developer Ballymore’s Nine Elms office scheme, One Embassy Gardens, SW8, for around £160m. “Typically we are not looking in places such as prime Paris, prime Berlin or prime London as deals there often don’t hit our total returns targets,” says Hardman. “You’ve seen us do a few acquisitions in locations such as Stratford and now Wembley in London, that have strong infrastructure, a mixed-use feel to them, and which are more affordable and where we think there’s some good potential escalation in the future pricing.” Logistics on the list Hardman adds that logistics are also on the DWS buying list, although she admits the firm is “a little bit wary” on big box logistics for some of the big retail names. “These assets can be expensive and it is getting harder for us to achieve return targets,” she adds. It is an interesting time to be leading the real estate division. First, Hardman has the saga of Brexit to deal with – “We have some investors who are completely switched off and do not want to know about the UK until they have some certainty, but we also have other funds and investors that are continuing to selectively invest in the UK,” she says. In addition, DWS’s majority shareholder, Deutsche Bank, has finally confirmed rumours that it is in merger talks with Germany’s other major lender, Commerzbank. The merger could see Deutsche Bank sell its stake in DWS as a way to fund the tie-up. German insurer Allianz is reportedly already considering a bid to merge its asset management arm, Allianz Global Investors, with DWS, a move that would create a business with some €1.2tn of assets under management. But for now, it is business as usual for Hardman – or at least trying to do business as usual. DWS is still looking for opportunities around London, she says. As the firm takes a long-term view of investing and typically holds assets for between 10 and 15 years, doing deals is based on whether buildings will “last the test of time”. Two options for investors Hardman is wary of the huge amount of capital waiting in the wings for an opportune moment to invest in the UK, however, and says that any reduction in pricing stemming from Brexit will be short-lived because of that weight of capital. Ultimately, she says, there are only two real options for investors while Brexit plays out. “You can see this situation either as an opportunity to invest, as there’s less competition, or you can wait because you don’t know what the pricing is going to be after Brexit,” she says. “Those are the arguments we have playing out constantly at the moment.” DWS in numbers DWS Group has €662bn (£566bn) of assets under management as of 31 December 2018 and a market cap of around €5.6bn. Some €53bn of these assets under management were in real estate as of 30 September 2018. DWS’s pan-European fund, known as Europe II, currently has assets under management of €500m with further investments under exclusivity. It has investments in Stratford’s International Quarter and has recently closed on a prime high-street retail investment in Dublin. DWS has approximately 3,600 employees globally, of which more than 450 are in its real estate business. To send feedback, e-mail louise.dransfield@egi.co.uk or tweet @DransfieldL or @estatesgazette