L&B Realty Readies For UK

DALLAS-Locally based L&B Realty Advisors LLP has joined forces with Mayfair Capital Investment Management Ltd. in London to invest in United Kingdom assets on behalf of L&B’s U.S. pension fund clients. The joint venture, dubbed L&B Mayfair Partners, plans to invest $250 million during the next couple of years.

L&B CEO Andy Smith tells GlobeSt.com he and his executive team vetted eight British firms over the past 18 months to find the right fit. Mayfair Capital, he says, has a similar culture to that of L&B, so the fit was good. L&B Mayfair Partners is interested in senior housing, because demand for that product is likely to be strong.

“They have the highest level of home ownership in the UK of any country in the world, so there aren’t a lot of apartments,” Smith explains. “But because all of us are getting older, the need for such care homes is taking place.”

He goes on to say that retail is also a potential sector for investment especially in what he calls “cathedral cities.” These are small cities around London with a high street, or main street. On those drags, Smith says, are high-quality retail. Furthermore, there are retail parks just on the outskirts of these towns that also have good-quality tenants.

Smith says there are a lot of things to like about real estate investment in the UK, not the least of which is transaction activity there is picking up. “Sellers and buyers over there have a better idea as to values, and we think they’re starting to recover more quickly than us,” he notes.

Another positive is the lease structure, which involves upward-only rent reviews. Once the lease comes due, or even if there’s an interim deal, they’re subject to upward adjustment, providing a landlord-friendly lease structure, Smith remarks.

Finally, “I don’t know how you can avoid London as a world-class city,” Smith remarks. “It will always provide quality real estate and have international attention. We think that bodes well for downturns as well as the upside.” Furthermore, he adds, the UK currency, the sterling, is a highly respected one that has started devaluing. “That offers better buying opportunities,” Smith comment.

When things turn around in the United States, Mayfair Capital will start looking at likely real estate investments on this side of the pond as well. “As our markets stabilize, that road will open up,” Smith says. “But that’s for later on in the partnership.”