Cornerstone Real Estate Advisors is set to gain exposure to European real estate after agreeing the purchase of European firm Protego from London-based private equity firm Smedvig Capital.
Cornerstone , the wholly-owned real estate investment management business of Massachusetts Mutual Life Insurance Company (MassMutual), has agreed to buy Protego Real Estate Investors, Protego Real Estate Investors Finance and their subsidiaries, in a deal that will see it assume a platform managing approximately $2.5 billion in real estate across Europe.
No sales price was revealed but the merged businesses will create a firm that manages approximately $30 billion in assets, creating one of the largest real estate investment management platforms in the world. In addtion, the sale by Smedvig realises a return of 6.2 times equity and an IRR of 58 percent.
Concurrently with the Protego purchase, Cornerstone will also absorb the real estate finance group of Babson Capital Management, another wholly-owned subsidiary of MassMutual, which focuses on commercial real estate loans, into the real estate platform.
Protego was established, with backing from Smedvig, by chief executive officer Ian Reid, head of business development Charles Weeks, and head of investment Hugo Llewelyn in April 2004.The firm has 30 employees across offices in the UK, the Netherlands and Sweden and has invested in the UK, Sweden, Finland and Germany.
Cornerstone was formed in 1994 and has predominantly invested across the real estate sectors in the US as well as in public real estate securities. Its strategies have typically been to invest in assets producing core and value added returns.
David Reilly, president and chief executive officer of Cornerstone, said: “The forging of this new entity will better position Cornerstone and Protego to continue to achieve in an even more comprehensive manner, and to satisfy the increasing needs of our clients to provide a wide array of investment opportunities, whether they be in debt, equity or REIT securities.”
Reid said: “This acquisition by Cornerstone represents the next stage in the evolution of our business plan. The timing of this transaction is ideal from all parties’ perspective as we plan a conduit for two-way transatlantic capital flows between the US and Europe.”
Reid said Protego had received a number of bids prior to the agreement with Cornerstone from both US and European business since it was established but that the deal with Cornerstone had been in discussion for almost 18 months.