London, U.K.-based Evonite launched last year with a plan to deliver consistent returns for investors across multiple fund offerings, leveraging the team’s decades of expertise in European property markets.
Since then, Evonite — comprising former fund managers with the German asset manager Patrizia as well as Rockspring — has expanded its leadership team and taken its pitch across the globe in a bid to court investment and to highlight potential value hidden away in European markets.
CEO Paul Hampton and the firm’s partner for strategy, José Pellicer, were in Toronto recently to drum up interest in the firm’s offerings. They sat down with Green Street News to talk about their efforts and why Canadian capital is increasingly attractive to European markets at a time of intense geopolitical uncertainty.
What brings you to Canada?
Hampton: José and I have been working with and spending time with investors across the globe, including Canada, for 20-plus years. So this is a region that we know well. We’ve got friends here, investors who we’ve known for a long time.
It’s a combination of reconnecting with people who we haven’t seen for a little while and building off the relationships that José was able to establish in December of last year [while presenting at the 2024 Global Property Market Forum] and talking to them about what we’re seeing in the marketplace.
A lot of the Canadians who we’ve spent time with over many years have always had a fondness for Europe, looking for value, deep-value opportunities. Candidly, there’s quite a lot of that happening in Europe at the moment. It’s a very attractive market to be in.
Pellicer: Canada has a very deep institutional pension market. There is a big mid-market here that is far less tapped than the Maple Eight. So that’s number one.
‘This is our opportunity to say Europe’s open for business’
Number two, because of the change of government in the U.S., this is our opportunity to say Europe’s open for business.
Why is Canadian investment attractive to you?
‘There’s a lot of cash that is generated in Canada that needs to be invested’
Pellicer: There’s a lot of cash that is generated in Canada that needs to be invested. Because Canada is more risk-averse than the U.S., and doesn’t have the legacy that Asian countries have, they speak the same language as us. So, therefore, it is pretty high up in terms of our markets that we want to talk to.
Hampton: We have essentially two products that we are talking to investors about at the moment. Both are sector-focused. And then we have more of an opportunistic early-cycle product.
Some investors will have different strategies to others. It’s about picking which one is right for which investor.
Who have you met with?
Hampton: Without referring to individual names, they’re household-name investors. Institutionally very well-known names. Pension funds.
What does Evonite know about European markets that those investors don’t?
Pellicer: There is obviously a big diversity of sizes within the Canadian pension funds. You’ve got the big ones, who have [European] teams, and then you’ve got the mid-markets, who don’t have local teams. We add far more value to a mid-market pension fund.
Also, Europe is a diverse place. The European Union has 28 countries and 28 different regulations. Yes, there are common regulations at the European level, but they vary at the local level. There are different taxation systems, market practices — even different ways of measuring a cap rate.
It doesn’t matter if you are sitting in Toronto and you have three investments in Europe. I can guarantee you’re missing a lot of what is going on in a continent with 28 members. It is a very diverse place.
What types of European assets could be attractive to a Canadian investor?
Hampton: Much of what we’ve been talking about has been what I’d describe as sidelined traditional real estate. So, it’s less perhaps about the alternative markets and more about looking at where the music isn’t currently playing.
‘It’s less perhaps about the alternative markets and more about looking at where the music isn’t currently playing’
We want to be looking at standing investments, income-producing investments in unconstrained markets where we can grow that income, that can be adjusted for inflation.
We see Evonite as a counterbalance — “complement,” I think, is a better word — to some of the bigger macro beta players who are doing a lot of development, particularly in favoured sectors like data centres. We don’t want to compete with that; we want to be a complement to that.
Retail is one area [where] I think there’s renewed interest. I think there are a number of investors who’ve said they — quite understandably — have a limited allocation to retail, not just in Europe but elsewhere.
Pellicer: The grocery-anchored park with a supermarket and some ancillary shops. Maybe furniture and some cheap fashion with some food and beverage, what in Europe we call a retail park, but it’s centred around the necessity of grocery.
Hampton: Necessity community retail.
How is the current uncertainty in the geo-political sphere playing into your discussions?
Hampton: One of the things that has been quite interesting speaking with Canadian investors is, we’ve been able to talk not just about Europe, but about what we’re seeing across the globe, how relationships between different regions are changing and how that’s informing how we look at our strategies in Europe.
Pellicer: There is a lot of uncertainty about doing business in the U.S. I have had anecdotal conversations with managers about deals that are on hold because of the uncertainty in the U.S. It’s increasing the interest that Canadian investors, in particular, have about investing in Europe.
‘The world is moving to a place none of us have seen before’
None of us has seen in our professional lifetimes such a material change in geopolitics, in the global trade environment, the monetary environment, technology — all of those things are changing now. It’s a substantial change, very substantial. In order to adapt, if you are a big organization, it is almost inevitable for you to move at a slow pace; you won’t be able to react and to pivot as you need to in a world that’s changing so quickly.
That’s one of the reasons we created this business, because the old narratives that you hear are all well and good, but that completely ignores the fact that the world is moving to a place none of us have ever seen before.
