Cornerstone adds to European network to launch new funds

Cornerstone Real Estate Advisers, the Connecticut-based fund manager, will open offices in Italy, Spain and France as it prepares to launch two pan-European funds.

The firm has taken the first step in its European push by making the first of three new country head appointments, in Italy. Valeria Falcone is joining from The Carlyle Group to head Cornerstone’s first southern Europe office, in Milan, and her appointment is expected to be followed shortly by others in Madrid and Paris.

Falcone will source Italian investment opportunities and capital from Italian institutions looking to invest in Cornerstone’s debt and equity products in the US and Europe.

Scott Brown, Cornerstone’s chief executive officer said that opening the three new offices will complete the group’s European network and enable it to do something it has wanted to for some time: launch pan-European funds.

Two pan-European funds are believed to be in the works and are expected to be launched later this year, or early next, one a core open-ended fund and the other a value-add product.

The value-add, closed-end vehicle will have a target return of 11-13 percent and is expected to be up and running first. It will be managed by Julian Gabriel, who joined Cornerstone in December 2014 as European head of investment.

The open-ended, core fund will be benchmarked against the most appropriate IPD indices as the portfolio is built up. Although no fund raising is underway, it is thought that Cornerstone’s parent, Massachusetts Mutual Life Insurance Company (MassMutual), will seed each fund, with between $100 million and $200 million each.

Brown said the business will also “eventually put together a high-yield fund for debt in Europe, probably in 2016”.

At the moment Cornerstone has capital for senior debt investing in Europe from MassMutual, which is invested via Chris Bates’ team in London.

Cornerstone manages almost $48 billion of assets, for 217 investors, but only $3.4 billion so far is in Europe. Last year it added to its UK and Nordic offices through the acquisition of Pamera Asset Management which has offices in six German cities.

Falcone was a managing director and head of Italy at Carlyle which she joined in 2004. At Cornerstone she will report to Gabriel. She said: “I’m looking forward to being part of an ambitious team which has a strong balance sheet behind it and a good reputation for successful four quadrant investment into real estate through direct, indirect, equity and debt transactions.”