JTC Group has developed considerable expertise in the real assets space, to specialise in infrastructure, real estate and renewable energy. Will Turner, Director – Fund Services, chats to Private Equity Wire about industry trends and some of the current challenges and opportunities facing the firm and its clients…
PEW: Can you outline the industry trends which have been driving growth and development within your firm over the past year?
Prevailing uncertainty in global markets coupled with rising interest rates and a high inflationary environment have all come together to put significant downward pressure on asset valuations, which reduced the appetite to allocate to Real Assets amongst international investors.
That’s not to say that the sector hasn’t seen deals happen over the past twelve months – but those that have happened have tended to be smaller and highly targeted.
Where that has been activity, it’s tended to be the ‘core’ and ‘core +’ assets, where there is a strong and secure income generation element, or where sustainability credentials are high.
PEW: Are there upcoming regulatory updates which could affect your business and that of your clients?
The UK’s Register of Overseas Entities (ROE) and remains a key consideration for offshore managers or investors into UK Real Estate.
In addition, the recent implementation of the Economic Crime and Corporate Transparency Act 2023 (the Act) is also high on the agenda, as it seeks to introduce a similar regime to the ROE for UK registered Companies, Limited Partnerships and LLPs, through either direct verification of information at Companies House, or indirect verification from an Authorised Corporate Service Provider (ACSP).
As an approved verification agent for the ROE and an ACSP in the UK, JTC has worked hard to help firms navigate the reporting procedures, enabling them to get ahead of requirements going into 2024.
PEW: Do you see the industry changing fundamentally over the course of the medium to long term? Are there any trends which have been given over-inflated importance?
We anticipate seeing continued focus on ESG and sustainability space in Real Assets going forward. ESG thinking is already being integrated into investment deals, but with 2023 having allowed the opportunity to reflect, there has been a definite move in preference towards stripping properties down to integrate ESG strategies, rather than building from scratch.
That will be an interesting trend to watch going forward next year, and an area where we at JTC feel particularly well placed to add value, having focused considerably on developing our integrated Sustainability Services proposition over the past year.
PEW: What are the primary challenges your firm and your clients are facing and what is critical to these being overcome?
Generally, with no leverage and difficulties in refinancing, Real Asset deals of real significance have been hard to push through which has given investors an opportunity for a period of self-reflection.
Whilst that’s not necessarily positive from a short-term market perspective, it’s arguably not such a bad thing in terms of long-term platform-building.
We’ve seen that investors, managers and advisers have been showing a genuine desire to put the groundwork in now, collaborate on initiatives and come together with a longer-term view – so that when the time comes for them to press the ‘go button’, they are in a strong position to do so and move quickly.
PEW: Could any shift or change influence the potential growth in the industry both in a positive or negative way?
There will be a point when asset values are perceived to have bottomed out – and there is then potential in the market for opportunities. Interest rates beginning to consistently move downwards will help to ease pressure on valuations, reduce the cost of leverage and start to unlock deal flow.
When that happens, there will be competition for investment. Which is why it has been so important for managers to use their time now wisely whilst they can.
Will Turner, Director – Fund Services , JTC Group – Will joined JTC in 2023 and has over 16 years’ experience within the financial services industry in Jersey, Hong Kong and Singapore, all of which has been focused on the real estate sector. In his role, Will is responsible for supporting the delivery of client service within the wider Jersey Funds team, specialising in real estate. Prior to JTC, Will worked at an international fund administration business in their Jersey real estate team and had oversight over a number of global clients and varied portfolios, as well as holding a number of board positions (both regulated and unregulated).
