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The Bruce Dear Interview: Fidelity's Neil Cable in the spotlight

  • United Kingdom
  • Real estate

15-11-2019

As originally published on CoStar on 07 November 2019

In the first of a regular series, leading real estate lawyer Bruce Dear talks to a senior player in real estate over lunch about the market, and the food. First up is Fidelity real estate chief Neil Cable who has news of his team's role in the group's new alternative asset and solutions division

Neil Cable, Head of European Real Estate at Fidelity, looks like Yanis Varoufakis’ doppelganger. Neil may not mind: some journalists say Varoufakis, Greece’s ex far-left Finance Minister, is “so sexy, he could star in Diehard 6.” And just like Varoufakis, Neil started life as a university economics lecturer, but there the similarities end. Neil is cannily commercial, steeped in real estate and definitively no Marxist.

We meet at Coq d’Argent in the City’s pink and cream postmodern cake slice: No.1 Poultry. The Silver Rooster (as it shall be called post-Brexit) serves sound “semi-haute” French cuisine, bucks the current “Ryan Air-ish” craze for close packed tables and has comfortable, well spaced chairs. In short, it’s an easy venue for a catch up.

Neil started his career at Standard Life under Francis Salway, the ex-Land Securities CEO. From Francis, Neil learned rigour and evidence driven decision making -: “research as a commercial edge, not an academic muffler.”

Since joining Fidelity, Neil has built an outstanding real estate team. They have a core Eurozone focused one billion Euro fund. Their UK fund has £650 million AUM. Together, they have carved a ten year track record of exceptional performance. Since launching in 2011, the Eurozone fund has been its peer group’s top performer.

The UK fund has outperformed 95% of its peers since its setup in 2008.

Fidelity has now created a new alternative asset and solutions division, comprising Neil’s real estate business and the multi-asset and investment solutions design teams. Andrew McCaffery, formerly ASI’s global head of strategic client solutions, is the division’s new CIO. This is a major strategic move and Neil is keen for real estate to play its full part.

“More than ever, real estate is an indispensable diversifier. It has a pivotal role in a lower for longer world, where long-term income is emperor. Investors must have the right allocation to higher, reliable yields.”

And Neil is not fazed by Brexit: “Brexit’s smog is masking the UK market’s good fundamentals. Other countries, such as Poland and Hungary, are also profoundly divided over the EU. Political uncertainty is the new global weather, and we have to get used to dressing for it.”

“My team counters uncertainty with robust real estate investment. We are searching for real assets that are, basically, generously yielding bonds – with walls and a roof.”

His team is renowned for its precise tenant risk analysis. “We use a multi-dimensional “Monte Carlo” simulation to blend and analyse data on millions of businesses. It helps us assess how resilient our tenants’ covenants will be all through their lease term.”

Across time and in every market situation, potential tenants’ businesses are virtually subjected to micro and macro-economic stress testing. This work is key to their success: the more you know about the likelihood of tenant default, the bigger your market advantage.

“It means we have better “quants” than most of our competitors. But make no mistake; our success is all about my team. Human judgement is the real alpha. You can cram a fighter plane with the latest computers, but without an exceptional pilot it’s just a steel box.”

His team has a distinctive approach to asset acquisition. “We are open minded on location, but never on covenant strength and building quality. Even now in the UK regions, the pricing gap between prime and second tier is much larger than it should be. This makes well let and strongly built second tier assets attractive.”

Our lunch reveals Neil as someone immersed in property. He is also immensely proud of his team and of what they have and can achieve. They exemplify Fidelity’s super close client focus and are well adapted to our hyper-complex and volatile global market. They will be integral to the success of Fidelity’s newly minted alternative assets and solutions group.

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