Lockdown and working from home have made keeping in touch with the many tenants outside Germany even more demanding for Cathrin Schwartz and her asset management team. “No matter which country our properties are in, we always aim to have direct contact,” she explains, as head of the Asset Management Europe department. “For me, it’s about common courtesy and also valuing people. Coronavirus has obviously meant that we can’t travel the way we used to, though.”
Tenant management work in particular has thus been handled via phone calls and video conferences since March 2020. Cathrin Schwartz feels it’s all the more important to stay in touch in these difficult times. However, she has found from experience that without the usual face-to-face contact all those conference calls need more preparation, more focus and even more tact, especially when it comes to complex issues and tricky negotiations. “We’ve learned a lot, and we’ve now adjusted to the new situation pretty well.”
Asset management seeks to maintain and increase property values
The asset manager and her expert colleagues are responsible for maintaining and boosting the value of Union Investment’s property portfolio across Europe. “Apart from purchase and disposal, my team acts as the interface to the property throughout the holding period. We’re the central point of contact, all information goes through us and is analysed, modified and channelled by us,” explains the head of the department. A management, letting and maintenance strategy is drawn up for each and every property. The content has to align with overarching company strategy and with the strategy of the relevant fund. The asset management team is also responsible for liaising with external property managers. “As property experts, we provide the risk and opportunity analysis and ensure that standardised processes and procedures are followed. We supply the fund management team with the necessary decision papers,” says Cathrin Schwartz.
Asset Management Europe team is responsible for the income and performance of around €10 billion in assets under management.
Born in 1965 in Hamburg, Cathrin Schwartz is a business administrator specialising in real estate and residential property who has enjoyed an international career in the real estate sector. She returned to Union Investment in Hamburg for the second time in 2008 and took over management of the European Asset Management department in 2013.
Crisis management requires adjustments
All plans and budgets have had to be reviewed since the start of the Covid-19 pandemic. It’s important to keep assessing the impact of the pandemic on property holdings and planning needs to be continually updated. Asset management provides the information needed by fund management teams to evaluate and manage the possible influences on a portfolio. Cathrin Schwartz’s team is made up of some 30 experts, divided into three specialist groups and located across four sites in Hamburg, Paris, Brussels and Vienna. They currently look after a dozen European property markets and more than 1,400 leases. In terms of assets under management, Schwartz reports that her team is responsible for around €10 billion, comprising some 100 fund properties, the bulk of which are office buildings. “Given the huge scale of the European segment, what we need above all is pragmatism,” says Cathrin Schwartz. Twelve national markets means that twelve different sets of infection control legislation have to be assessed. “In addition, the flood of different Covid rules has varying impacts on tenant income.” The key factor for Schwartz is how the Covid measures affect a specific sector. “Close monitoring in conjunction with our legal department is absolutely essential,” she says.
As an asset manager, she has been guided by a clear strategy and high level of conviction throughout the coronavirus crisis. “We’re working almost around the clock to pull together information relevant to our decisions as property portfolio holders. We analyse every piece of data. On the one hand, the aim is to minimise the effects on our fund assets, and on the other to craft individual solutions together with our tenants that are economically viable for all parties. In doing so, we seek to protect the long-term business relationship with our tenants,” says Cathrin Schwartz.
employees look after twelve European national markets comprising around 100 fund properties and more than 1,400 leases.
Bespoke coronavirus reporting developed and introduced
At the start of the crisis, the asset management team found it lacked the right tools to map the effects of the crisis on individual properties. “We moved very quickly to set up a new reporting system, working closely with colleagues in the Reporting Factory,” explains Schwartz. Without precise feedback, it’s almost impossible to extrapolate the big picture from the sheer volume of individual case-by-case decisions.
The new coronavirus reporting system, which is now being deployed by all asset management units (Europe, Germany, Overseas, Retail and Hospitality), provides a sound basis for important decisions. The asset manager assesses tenant requests objectively on the merits of each case. Tenants in genuine financial distress got in touch, but there were also a few major customers who wanted to establish whether their landlord was open to rent reductions, deferrals or other concessions. “Discussions have to be kept strictly factual, supported by relevant background knowledge from the various countries. What we can’t do, is give money away during the coronavirus crisis. Our fiduciary duty to investors makes that impossible, quite apart from other considerations,” explains Cathrin Schwartz. In the office sector, it’s primarily airlines, tour operators and travel agencies that are affected. Co-working providers have also been hard hit. “If a tenant asks for help, we look at the individual circumstances to decide what’s acceptable in our shared interest,” says Schwartz. Rent waivers are always the last resort.
Wherever possible, they are only agreed in return for other lease adjustments, such as extending the term. “Rent deferrals can help to overcome short-term issues in many cases,” comments Schwartz. “It’s also important that we take all possible scenarios into account, because vacant space isn’t a satisfactory long-term alternative.” Schwartz sees current new lettings in particular as a positive sign: “We’ve managed to keep the letting rate above 96 percent throughout the crisis. On top of that, we were able to newly let or re-let more than 100,000 square metres in 2020.”
“I think it’s important to take responsibility for others”
The experienced departmental head also carries a lot of responsibility in her private life. Cathrin Schwartz has taken on the care of a disabled cousin for her family, and on top of that is also a mentor for the Hamburg branch of Joblinge, a charity that fights youth unemployment and works to integrate young refugees. “I think it’s important to take responsibility for others,” she explains. “Voluntary work is my way of giving something back, not just in these tough times.” Schwartz enjoys sailing in her leisure time and says of herself, “I like to make decisions and I fight for my convictions.” When it comes to her international career, Schwartz says she’s been very lucky. “I was allowed a lot of responsibility right from the start and was able to seize many opportunities. My motto for life has always served me well,” she says, admitting that she borrowed it from polar explorer Roald Amundsen: “As long as you have warm feet, you can do anything.”
By Elke Hildebrandt (text) and Sebastian Vollmert (photos)