Risks to real assets
Paulo Almeida, Manager of Tufton Oceanic Assets, said: “High valuations of containerships was a risk to our portfolio. We have addressed this by selling them at attractive prices and reducing our percentage of assets in containerships from 40% to 10%. We have re-allocated that capital to other segments, bulkers and tankers, with below mid-cycle valuations and/or higher yields.”
Nick Preston, Manager of Tritax EuroBox, said: “While the Covid-19 pandemic has been challenging for society, it has served to reinforce the importance of the logistics sector as a whole, and especially highlighted the critical nature of sustainable supply chains. In particular, it has accelerated the adoption of e-commerce and encouraged companies to shorten and simplify their supply chains. Occupier demand for assets has therefore continued to grow while occupational supply remains constrained, creating a supportive investment environment for long term asset owners such as us.
“We continue to construct a portfolio which is diversified by geography and tenant and that generates a high and secure level of inflation-linked income, as well as capital growth, which will in turn support and deliver the total returns and dividends we are targeting.”
John White, Co-Manager of LXI REIT said: “We seek to minimise the risks of our business and portfolio by investing in long-let, inflation-linked assets diversified across a range of defensive and structurally supported sectors. These are leased to a wide range of strong tenants, predominantly making off-market investments and forward funding opportunities. We deploy our capital swiftly and prudently to avoid cash drag into an identified portfolio of investments and use long term debt with a low fixed cost. This helps to ensure that we can deliver further attractive inflation-protected income returns and capital growth for our shareholders over the long term. We find and create value through our strong relationships which provide access to off-market opportunities, and through seeking out assets and sectors that are likely to deliver enhanced value to our portfolio and shareholders.”
Phil Kent, Manager of GCP Infrastructure Investments, said: “GCP’s risk framework identifies four areas of investment risk, which vary based on the specific asset class. These are: (i) market risks, such as exposure to electricity prices or inflation; (ii) credit risks associated with reliance on the performance of customers or suppliers; (iii) operational risks associated with building or operating real assets; and (iv) legal and regulatory risks, such as corporation tax or change in law. Recently, the high volatility seen in the energy markets, and associated volatility of revenues received by renewables presents both risk and opportunity.”
