BMB buys stake in Alliance Capital, plans new funds

The BMB Group, the Islamic advisory firm which counts the Sultan of Brunei’s family among its clients, has teamed up with Alliance Capital Partners to form BMB Alliance, a pan-European commercial and residential real estate investment firm. BMB invested an undisclosed sum in Alliance and plans to invest $500 million in the firm over the next 18 months.

Netherlands-based Alliance Capital Partners, a real estate investment vehicle led by veteran investor Tom Moeskops, has assets including roughly $1.7 billion of German residential properties, $1.3 billion of Dutch core and core-plus offices and $1 billion in European core-plus shopping centres.

“We really want to see the Alliance group continue in that platform,” head of global real estate for The BMB Group, J.Gary Peters, said in an interview Wednesday, adding that the portfolio generated yields of up to 10 percent, particularly as government-agencies were often tenants. “For us, it’s non-sexy real estate, but these types of portfolios really carry you through some challenging times,” he said.

BMB also plans to develop a series of real estate funds – one of which will be announced in the next two months – in a bid to boost BMB’s assets under management by an additional $3 billion over the next two years. The first fund will be a real estate opportunity fund, seeded with $600 million of equity from BMB and a “very large Malaysian investor,” according to Peters. The fund will invest primarily in distressed real estate, but also what Peters called “debt plus” transactions, meaning a combination of debt and “some minor equity position that’s remaining”.

BMB also plans a hospitality fund, targeting public companies with an enterprise value of roughly $750 million and luxury-resort branded hotels with an enterprise value of approximately $450 million. Almost 70 percent of the capital for the hospitality fund will come from BMB, with the remainder coming from some of BMB’s “sovereign partners”.

The firm said it was implementing a “buy-and-build” strategy of combining asset management platforms and real estate portfolios. “What we’re doing is buying not only the properties but we’re buying the management companies as well,” Peters said.

Earlier this month, BMB acquired the principal investing business of Contrarian Capital Partners and its real estate advisory subsidiary, Beacon Hospitality Partners SARL. BMB called the acquisition “the first step” in a move to “invest heavily in real estate around the world.”