Private equity real estate firms are generally used to sourcing deals themselves, and then persuading senior debt and mezzanine providers to back them. But now several major banks, including Morgan Stanley, Merrill Lynch, and ABN AMRO, have set up real estate investment banking arms to source deals, structure the debt and arrange the equity funding themselves.
US investment bank Bear Sterns is the latest to join this trend, and has hired Philippe Vienot and Ralf Nocker from Nomura to co-head their new team. They are assisted by Marie Brixtofte-Clapshaw, another former Nomura banker, who joins Bear Stearns as an associate. They will be based in London.
Vienot worked at Credit Suisse First Boston and Nocker at Nikko Principal Investments, before both joined the asset finance team at Nomura in June 2003. While at the Japanese bank, they worked on deals worth more than €2.5 billion ($3.1 billion) in total, including the €440 million sale and leaseback of holiday park operator Center Parcs Europe in September 2003, and the £245 million buyout of London events venue owner Earls Court Olympia by St. James Capital in June 2004. Both Vienot and Nocker left the bank in June.
We had a very good run at Nomura,” says Nocker. “But the opportunity to create a new department and start your own group only comes up every so often.”
That department will find equity backers for real estate deals, and provide them with a complete structured debt package including commercial mortgage backed securities, banking notes, and mezzanine financing, as well as assisting in the due diligence process.
The new group will focus on investments in high yielding or operational real estate in Germany, France, the UK and Sweden. Nocker describes the last of these markets as “the unknown pearl” of Europe. “Property yields jumped to 7 percent to 8 percent after the 2000 crash and did not really come down again, despite the economic recovery,” he says.
Despite the bank's confidence in the opportunities that real estate investing in these markets presents, Bear Stearns will invest its own balance sheet into debt and junior mezzanine positions, but will source all its equity externally. “We feel that we can rely on a strong stable of equity clients,” says Nocker.