Aggregation and granularity: Marcus Meijer on MARK’s European ‘beds and sheds’ strategies

Starting off with his love of art, cities and architecture, which can be seen in the regeneration of Borough Yards and the Whiteley in London, Marcus then discusses the company’s multi-platform approach to investment and why aggregating granular assets underpins its European ‘beds and sheds’ strategy.

You can listen to this podcast via Apple Podcasts or Spotify or SoundCloud or listen to it through the player below:

Investment levels into European residential and logistics real estate hit new records in 2021, in large part thanks to investors seeing them as ‘pandemic-proof’ and resilient to any future shocks. MARK, which currently manages over €9bn in assets, has made big plays into both sectors.

In May 2020, the firm launched its urban logistics platform Crossbay, the first in Europe to specifically target single-user distribution centres, and last year partnered with Credit Suisse to invest in rental housing in Germany and the Netherlands through its new residential platform DOMA.

With both platforms, MARK is applying the lessons learned from its VIA Outlets venture with APG and Hammerson, which the investment manager exited from in 2019.

Chief of those is the smart use of technology to optimise the asset management process. “It’s not just a question of throwing people at it, but it’s actually finding the right interplay between people and technology to be able to run your operations more efficiently and ultimately, for the user to have a better experience.”

However, what really unites the two platforms is the use of on-the-ground local teams to acquire granular assets - single-occupier warehouses in the case of Crossbay and small apartment blocks in the case of DOMA - in off-market transactions from private vendors.

When asked why Crossbay opted for last-mile urban assets as opposed to the big sheds, Meijer points to attractive supply-demand dynamics and a smaller pool of competition.

“One of the big natural benefits is that you can’t really build anymore because it’s within the urban fabric and that scarcity of supply will always remain unless you enlarge a city further and further. The further away you go, the greater the opportunity for somebody to build a better box right next to you, offer a slightly lower rent and then you lose your tenant”, he adds.

Meijer believes there will be an increased focus on driving environmental efficiencies in the logistics sector for the foreseeable future, driven by rental growth rather than yield compression. He points to the double digit rental growth in the US as a proof point – “It’s always the case that it happens in the US first and then the UK follows.”

Rental growth prospects are also key considerations for DOMA.

Launched in September 2021, DOMA aims to amass a €1bn pan-European rental housing portfolio. With the backing of Credit Suisse, DOMA is focusing first on Germany and the Netherlands.

What separates the platform from other residential for rent strategies is the targeting of older, smaller apartment blocks - no more than 18 units in size - rather than large-scale new-build developments.

“It’s very granular – it’s more granular in some ways than Crossbay in terms of the sizes of the assets that we buy. But that also makes us more competitive, because it’s just more difficult for competitors to get that close to the asset and to execute that strategy so quickly,” argues Meijer.

DOMA, which aims to make acquisitions every week or two, is able to secure discounts due to its ability to transact speedily. “Similar to Crossbay, we play to our strengths and aggregate really quickly at an attractive price point,” he explains.

MARK’s strategy for the UK rental market is more conventional, having recently acquired a site in Birmingham with HUB to develop a build-to-rent scheme. Given rising construction costs and Britain’s notoriously complex planning system, Meijer notes “you really want to have the most sort of weathered, tried-and-tested development partner”.

You can listen to this podcast via Apple Podcasts or Spotify or SoundCloud or listen to it through the player above.