At AlbaCore, we focus on the long-term. As one of Europe’s leading alternative credit specialists, we invest in private capital solutions, opportunistic and dislocated credit and structured products.
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Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.
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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.
Our philosophy is very simple. We are constantly searching for high quality businesses and when we acquire them, we will work relentlessly with them to create long-term sustainable value through innovation, ESG-led and proactive asset management.
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Global property opportunities are built on solid ESG foundations
Confirming our portfolio net zero overlay intention has further deepened our understanding of the global property securities sector we invest in. Our continuous focus on in-depth, in-house research means we can see things differently, which has led to discoveries into new risks and opportunities. Our focus on capital preservation remains as strong as always with a preference for allocating capital to well managed assets in high barrier to entry markets in many of the world’s most bustling cities.
Data centres - tapping internet growth via listed property
Investing in listed property stocks that own data centres - the specialist buildings which house the infrastructure required to power modern internet usage – gives investors access to one of the greatest structural shifts of our time.
Reliable data centres are expensive to build which means that the supply of new centres is well controlled. A turn-key data centre in the US can cost twice as much as an office tower to build.
This cost reflects the highly specified plant and equipment required for the data centre to have virtually no risk of down time in operations.
Data centres have a wide range of business models appealing to a diverse range of customers - from governments to telecommunication companies to vast internet-centric firms.
With the industry thematic of a high rate of adoption of the internet, together with the large growth in cloud computing, data centres with the right business model can deliver high cash flows well into the future.
Data Centres - Total Operational Floorspace
Source: 451 Research and Digital Realty
Build to rent boom
With accelerating tenant demand now an established long-term trend, the supply of purpose-built rental accommodation has failed to keep up with vacancy rates that are very low in most global cities*.
Strong house price inflation has affected housing affordability. Purpose-built, professionally owned and managed residential rental properties are emerging, with luxury amenities like gyms, community facilities, parcel delivery and even child care being included.
Within the ‘residential for rent’ asset class, cash flows have proved stable through economic cycles, with occupancy levels typically remaining high through periods of economic slowdowns. Rents are correlated to employment and wages growth, demographic trends and supply levels. From an institutional investment perspective, we believe the returns have been competitive.
* The vacancy rates for residential real estate is 7.2 % in Paris as of December 2019 and 3.9% in New York as of June 2020. Over the past 3 years, house price inflation in London, Paris and New York has been 2.2% (to 31 March 2020), 17.3% (to 31 May 2020) and 8.7% respectively (31 March 2020). Source: The National Institute of Statistics and Economic Studies, U.S. Census Bureau, HM Land Registry, Federal Reserve Economic Data (S&P/Case-Shiller NY-New York Home Price Index).
U.S. Household Formation vs Total Housing Completions
Source: Government data as at March 2020
An eye on investment opportunities in student accommodation
While most sectors suffer in times of high unemployment, history has shown us the education sector attracts increasing enrolments as consumers look to bolster their employability. For property investors, this recession-proof demand combined with strong growth in student numbers makes student accommodation a defensive diversification play against the broader equity market. There were over 5.3 million international students in 2017, reflecting an uplift of more than 150% since 2000 (UNESCO 2019).
75% of the top 20 most highly rated universities are located in the United States and the United Kingdom (Source: QS 2020 World University Rankings). Unsurprisingly, demand for places is strongest at these highly rated institutions. Student accommodation in the United States and the United Kingdom remains a drawcard for international students.
Closing out strong gains for our portfolios, we have recently exited from our exposures to this sector. We are currently watching short term headwinds related to the COVID 19 pandemic, while evaluating the longer term implications of the potential shift towards remote learning by universities before considering re-establishing a position.
Meet the investment team
Stephen Hayes
Andrew Schaffer
Dennis Maloney
Daniela Lungu
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