Oxford investing in France while Ivanhoe plans its departure

Blake Hutcheson of Oxford Properties Group has high hopes for the company this fiscal year, including adding a little French exposure, contrary to Canadian peer Ivanhoe Cambridge, which is withdrawing its European investments.
Hutcheson, responsible for turning Oxford Properties Group into a $22-billion business, said he expects to take the global business plan to a $30-billion value in the next few years.
Oxford is preparing to put down roots in France, a country with a great deal of distressed commercial real estate and other opportunities, the CEO said said prior to presenting at a BOMA event in Ottawa.
“We are taking a serious look at France and specifically Paris,” he said. “It is going into recession and it is experiencing the impacts of the difficulties in the Euro-zone. That is either a red caution light to stay out or it may present real opportunities to get in at cheaper entry points than we have witnessed historically.”
He said Oxford has put people on the ground in France in the last year but “have yet to make a bet.”
“We are underwriting all sorts of things and are being very studious as to what may transpire in that part of the world.”
Ivanhoe Cambridge sells a property in France. More European sales to follow.
Oxford is rolling out its plan to invest in France at a time when other Canadian companies are withdrawing. Bloomberg reported on Wednesday chief executive officer of the Caisse de Depot et Placement du Quebec Michael Sabia said they are selling their properties in Europe.
Bloomberg quoted Sabia as saying, “There’s a dark night going on in Europe, a dark and foggy night where bad things come out of trees and bite you. It’s a pretty scary place. In Europe there are investments to be made, and I think it’s possible to be successful there but there’s no place in the world, other that maybe emerging markets, where the word selectivity is fundamentally important.”
Consistent with these remarks Ivanhoé Cambridge announced on May 8 that it has finalized the sale of the office building located at 42, avenue de Friedland, corner of rue de Tilsitt, in Paris’ 8th arrondissement.

42, avenue de Friedland, Paris, France recently sold by Ivanhoe Cambridge
Contrary to Sabia's remarks, Ivanhoé Cambridge, the Caisse de Depot's real estate company, and Blackstone Real Estate formed an alliance in March that could give them a significant stake in French REIT/SIIC Gecina.
They will jointly administer a 64.7 per cent interest in the €1.6bn of loans in Spanish debt secured on stock controlled by two senior Gecina shareholders. Those shareholders have been on the wrong end of court decisions, putting their ability to hold onto their units in jeopardy and likely giving Ivanhoe and Blackstone a future opportunity to convert the debt interest into stock.
Oxford believes in the U.K.
Hutcheson said Oxford also has strategic investments in the U.K., a market his company strongly favours.
“We're big believers in London basically because it is the most liquid market in the world and we'll always be able to trade in and trade out given the international attention that it garners.”
He added Oxford has invested about $3 billion in London in the last three to five years. With an office in the English capital, his company remains on top of any market volatility or opportunities.
Hutcheson also has plans for the U.S., which is beginning to take large steps toward recovery.
“We have put in about $2 billion to work in the United States over the last three years in anticipation of their market turning,” said Hutcheson. “I think we got in early and those assets have all appreciated in value as the U.S. comes out of the turn. We feel we got in ahead of that trend and benefited in a big way from the recovery in America.”
He admitted that the ideal opportunity to take advantage of the depressed market has already passed with the recent significant recovery in property values south of the border.
Oxford not investing in Asia, Central and South America
There has also been a great deal of hype about CRE opportunities in Asia, Mexico and South America, but Hutcheson said Oxford won't be joining other companies prepared to spend billions.
“We are not going into Central and South America at this point – and into Mexico. We think it has had a pretty good run-up. And we are not going into Asia or India at this point.”
Hutcheson seems to light up when he enthusiastically talks about strategy, risk and balance.
“We have a constant churn in our portfolio, which is 59 million square feet. We will continue to trade out some assets, but we are not straight across the line net sellers in any market today in Canada,” he said, adding the position depends on the market, the assets and the strategies involved.
As a result, Oxford Properties Group provides a scale of diversification that generally leaves it greater investment options and opportunities for profit.
Every market is different
“There are times in most markets to invest, there are times to sell, there are times to develop, keep your powder dry, times to be recapitalizing and investing in credit as opposed to hard assets,” Hutcheson said. “But the beauty with Oxford is that we have an ability to do all of the above for all asset classes.
“In certain markets, we choose to push hard to get into the market because we believe it is trending in the right direction and we are investors. In certain markets, we are net sellers where we think that it is too good to be true, so we are taking some money off the table. In lots of markets, we think we can manufacture profits through developing better than we can by standing in line and getting into bidding wars to buy income-producing assets.”
About Blake Hutcheson
Before joining Oxford, Hutcheson served as the head of global real estate with Mount Kellett Capital Management, a New York private equity firm with offices around the world.
In Canada, he is best known for his time at Oxford and his 14 years with CB Richard Ellis in Toronto, serving as its president for Canadian, Latin American and Mexican operations for a decade.
While in Ottawa last Thursday where he was honored by BOMA Ottawa in their inaugural 'Icons of the Industry' lunch held at the Westin Ottawa, Oxford's president and CEO told real estate industry professionals stories about his career and tips for how to succeed in business.

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