In this month’s interview, Frédéric Bôl, Founder and CEO of Swiss Life REIM (France) and Béatrice Guedj, Head of Research and Innovation at Swiss Life REIM (France) discuss the recent launch of the research chair at EDHEC-Risk Institute supported by Swiss Life REIM (France) on the role of real estate in investment solutions, their hopes for the research that will be conducted within the chair, the changes and challenges in the domain of real estate investing and the position of Swiss Life REIM (France) in the current environment. They finally explain why they have decided to partner with EDHEC-Risk Institute on this research chair.
Swiss Life REIM (France) and EDHEC-Risk Institute have launched a research chair on the role of real estate in investment solutions. Could you tell us why you decided to focus on this area of investment?
Béatrice Guedj: Real estate is a key element for diversification in asset allocation. The “illiquidity” premium means stronger overall performances over mid- to long-term horizon, a perfect match to long-term liabilities, which explains the bandwagon effect from investors for this asset class overtime. Given the paradigm shift of the industry to investment solutions rather than off-the-shelf investment products, academic research is crucial to appraise the potential of real estate as one of the key drivers of multi-asset investment solutions.
Frédéric Bôl: Obviously, we strive to meet current and future client’s needs. We are committed to thought leadership on designing investments solutions including real estate. In France, major changes are expected to occur in the retirement system soon; this will clearly mean a need for improved investment solutions, and we expect real estate investment vehicles to be a key component of such solutions: as such, the chair is in line with our pro-active stance to shape future needs as well as our commitments to tackle new opportunities.
The aim of the partnership is to provide a comprehensive analysis of the role of real estate investments in institutional portfolios, with a particular emphasis on how real estate investments can prove to be key ingredients within the performance and hedging components of investment solutions. Could you tell us more about your hopes for the chair?
Béatrice Guedj: Real estate can be seen as a bond with an equity kicker. In most of the countries, leases are indexed on CPI, which means an inflation-linked replacement cash-flows overtime. The equity part relies on local market performances, through additional income returns and capital returns. The chair will definitely help to figure out what could be the contribution of real estate in retirement solutions at all stages of the retirement cycle for instance.
Frédéric Bôl: The chair will be dedicated to a comprehensive analysis of the empirical and practical challenges related to factor investing across real estate markets. We can imagine a twofold approach factor investing model through property attributes, versus macroeconomic factors.
How well positioned is Swiss Life REIM (France) in the domain of real estate investing for institutional investors?
Frédéric Bôl: Swiss Life REIM (France) is definitely seen as a strong partner given our track record: we have been managing institutional investor's money for more than 10 years. As of today, Swiss Life REIM (France) manages more than €13 bn euros, with €11 bn euros for third parties: our institutional investors currently invest through funds, separate accounts, joint ventures and club deals. Our track record as well as our co-alignment with clients have both paved the way for a long-term relationship. Finally, our commitment to a proactive Responsible Investment strategy is well perceived by the investor community.
Béatrice Guedj: Our research approach to investment is definitely a strength given high standards requirements of sophisticated investors. We use diversification techniques across all assets classes and geographic scopes to capture performances premia with a sizeable reward potential.
What are the main changes you’ve noticed in the world of real estate investment over the last few years and what, in your opinion, are your main challenges for the future?
Frédéric Bôl: There has been a tremendous appetite for real estate since 2008, in line with an ultra-accommodative monetary policy. The strong competition might have pushed some investors to move upward the risk curve probably outside their comfort zone. The main challenge for the future is to ensure that real estate investments are resilient to ride the cycles over time.
Béatrice Guedj: The trend is towards an acceleration of cross-borders investments to diversify risk. As such, our competitive edge is to provide a European platform based on multi-local expertise.
What made you decide to partner with EDHEC-Risk Institute on this research chair?
Frédéric Bôl: EDHEC-Risk Institute is a well-regarded leader in research related to asset management industry. It has a proven track record in institutional money management apart from its academic footprint.
Béatrice Guedj: EDHEC-Risk Institute is at the forefront of the factors investing techniques and is ahead of the game in research on illiquid assets as proved by its initiative in hedge fund, infrastructure and property indices. We have known the team, in particular Lionel Martellini and Nikos Tessaromatis, since many years and we are delighted of the partnership.
About Frédéric Bôl
Frédéric Bôl is the Founder and CEO of Swiss Life REIM (France) (formerly Viveris REIM). Very active in the management and regulation of real estate funds, he led the af2i working group (French association of institutional investors) and participated in the work of the AMF (the French Financial Markets Regulator) in 2007 on the general regulations of the OPCI.
Frédéric started his career at the financial department of L'Européenne de Banque (former Rothschild), then at Martin Maurel Gestion as Head of fixed-income management and institutional investor clients. Then, he became Chairman of the Executive Board of Prado Epargne, and Deputy General Manager and Member of Executive Committee and Management Committee of Premalliance Group (AG2R La Mondiale). In 2007, he created Viveris REIM, which obtained one of the first approvals issued by the AMF for the management of OPCI. Frédéric Bôl has been President of ASPIM since 2016, the French body for the non listed real estate vehicles.
About Béatrice Guedj
Béatrice Guedj holds a PhD in Economic Theory. Before joining Swiss Life in early 2018, she headed up the research department at IEIF, a think tank specialised in real estate, where she started working with EDHEC-Risk Institute in 2016. Béatrice was Managing Director Research at Grosvenor Fund Management Europe from 2004 to 2016. She is certified as an expert by the French Ministry of Research in France to pursue R&D in real estate. She sits on the boards of Finance Innovation, PropTech (France’s official cluster for financial innovation) as well as on the Steering Committee of the Urban Land Institute (ULI).