KLM Real Estate has launched KLM Asset Partners, an asset management business, with two significant mandates.
The move is one of the first examples to launch of a much-talked-about trend for leading retail and leisure advisers to consider adding an asset management offer to their service, rather than working with an asset management business.
CoStar News revealed in June that KLM had recruited Nick Sewell to lead an offer in the space. Sewell has now joined from Urbn Partners, a specialist town centre regeneration and development company that he will continue to operate. Prior to that he spent five years as an executive director in CBRE's retail capital markets team and was head of ReShape Retail, liaising across the business to lead on the repurposing of retail assets that were too large or no-longer fit for purpose. Sewell focused on working with investors to right size and stabilise assets, and strategic acquisition work with local authorities.
Before, that he spent 10 years with NewRiver REIT as an executive director. He joined the real estate investment trust at its initial public offering on the AIM market in 2009. There, he helped establish a market-leading investment platform focused on grocery and essential retail.
Importantly, both CBRE and NewRiver REIT have recently bought specialist asset managers – Sovereign Centros and Ellandi respectively, most recently the CBRE deal in 2023. Blackstar Real Estate was set up last year by Sabri Marsaoui, who had worked for Capital & Regional and Crosstree Real Estate Partners. Other examples of platforms in the space are Estama Asset Management, and Vedra Property led by former head of UK retail at CBRE, Rhodri Davies, and Chris Harris, the former John Lewis property director.
KLM Real Estate is a specialist retail and leisure agency that recently celebrated 35 years in business. In a recent profile of the company in CoStar News, Mark Bennett, a partner focusing on the investment and development market, in particular mixed use, high-street and leisure assets, said the business would focus more on asset management. "You have seen advisers start moving into this space and we have started to do that over recent years too. We will make a move into it in a bigger way as we have the experience and expertise in house; so why not?"
The recovering UK retail market, particularly retail parks, shopping centres and prime city centre high streets, something that is encouraging businesses to focus on offering asset management advice.
Speaking to CoStar News, Bennett and Sewell confirmed KLM Asset Partners had launched with two initial instructions on behalf of the joint venture of Redcliff, Areli Real Estate and Tikehau Capital. They are the major build-to-rent, mixed-use makeover of The Nicholson Shopping Centre in Maidenhead and The Walnuts Shopping Centre in Orpington, which Tikehau bought through its 2018-launched Real Estate Value-Added fund in 2019.
Bennett says there has been a slow movement of clients beginning to seek advice on a wider range of services from agents, beginning around seven to eight years ago.
"In particular family offices and private high-net-worths have sought a full service including lease advisory, rent reviews, investment advice and increasingly asset management and property management."
What has become clear, Bennett says, is that from advising a client on buying an asset, there has been an increasing request for what he terms a 360-degree service. "We have been looking to add an asset management business for some time but have been waiting for the right person, and that person is Nick."
Sewell says that the recovering retail market, alongside a clear rebasing of rents, has made assets in the sector more attractive to new capital, while the lending consortiums and local authorities that have taken control of shopping centres in the past few years clearly need asset management help.
"The advice needed is often about repositioning assets, bringing in new occupiers, reviewing the mix of uses, including more leisure and creating places."
For this reason Sewell and Bennett say the "partners" addition to the new business's name is crucial. "This is a partnership model."
It is a partnership model, too, in terms of its integration with the rest of KLM's skills, with Sewell able to draw on the in-depth knowledge the business has, for instance, new occupiers looking for space.
KLM is now a 22-strong business, but Sewell will be adding team members.
The asset management arm is also in talks with several councils, as well as housebuilders, about providing advice. "These parties need help with the placemaking and making a success of the retail and leisure."