Real estate activity is stepping up in emerging markets and senior real estate bankers are following suit. One example is Jeppe de Boer, 38, who has left Goldman Sachs in London to join Renaissance Capital in Moscow.
Netherlands-born de Boer became head of Goldman Sachs' real estate investment banking advisory business in Europe when it was established in 2004.
Though de Boer did work in some emerging markets for pan European clients of Goldman, his work was mainly in the UK, France and the Benelux region. However, his new position as Renaissance's head of investment banking real estate means he will focus on emerging markets 100 percent.
From Moscow, where Renaissance is based, he will grow the company's real estate business in Russia but also in Ukraine, Kazakhstan and perhaps the most untested real estate market of all, Africa. IPOs, mergers and acquisitions and fund raising will be the bread and butter of his work, and he told PERE he expects to be advising private equity firms because of their involvement in property in the emerging markets.
“Private equity is a very important source of capital and there is quite a long list of private equity players that specialize in real estate,” says de Boer. “They are quite welcome because they have the combination of having equity to invest in real estate and at the same time having expertise to execute transactions.”
Russia in particular has attracted its fair share of private equity real estate funds. Morgan Stanley, for example, took a minority stake in Russian developer RGI International last October and then took it to the public markets.
Though a relatively new real estate market, de Boer has found in Moscow that a number of real estate professionals he rates highly are already operating. “There seems to be a growing number of people that are focusing on these markets and spending more time here,” he says. “I expect that a very important part if not the most important part of real estate activity is going to take place in emerging markets at least for the foreseeable future. It does feel as though people are focusing their attention away from Western Europe and towards emerging markets.”
Cordea Savills' Italian hires
London-based Cordea Savills has made three new hires in its Milan office. In the first, Alessandro Castiglione has been hired as the director of investment. Castiglione will have overall responsibility for asset management of the firm's Italian portfolios and previously worked for BNL Fondi Immobiliari, Deutsche Bank Real Estate and Unieuro SpA. Pierfilippo Barattolo is the second hire, responsible for pan-European investment on behalf of Italian clients. Before moving to Cordea Savills, Barattolo was investment director at DTZ, BNL Fondi Immobiliari and Nextra Investment Management, where he worked on Italy's first ever pan-European fund. The third hire is Giuseppina La Mantia, who will become an asset manager for the firm. Cordea Savills set up shop in Italy in 2004 through the opening of an office in Rome. A year later, it relocted to Milan. The team currently consists of 15 members managing Cordea Savills activities ranging from core to opportunistic strategies.
Invesco hires for European hotel and leisure funds
Invesco Real Estate has hired two real estate pros for its hotel and leisure fund management business. Marc Socker and Keith Evans are joining the London office. Socker joins as acquisitions manager from the corporate finance team of global property services firm DTZ, while Evans joins as an analyst from Spanish consultancy EuroPraxis Consulting. Jochen Schaefer-Suren, the head of Invesco's hotel and leisure fund, said there are plans for further hotel strategies, funds and investment mandates to add to the existing vehicle. “We are building our hotel asset management and investment capabilities for our existing hotel fund management business but are also planning additional hotel investment strategies, funds and investment mandates for the next 12 to 24 months,” he said. Dallas-based Invesco manages a total of 10 hotels for the European hotel fund. The firm raised €1.2 billion ($1.7 billion) last year and owns the exclusive hotel investment management rights for French insurer Generali France.
Cushman and Wakefield beefs up
The world's largest privately owned real estate services firm has hired Nigel Pedroz from HSBC bank to focus specifically on indirect real estate advisory work. Cushman and Wakefield has appointed the former HSBC Specialist Investments professional to focus on indirect investment within the firm's corporate finance division. He will be involved in global fund structuring, new product development and equity placement assignments, according to the firm. The new recruit headed the team at HSBC which provided corporate, fund and debt structuring services to clients together with operational management to support pan-European real estate investment. Cushman and Wakefield's indirect team provides a range of transactional, structuring and equity raising services to investors, asset managers and funds on a global basis. Over the past two years it has advised clients on approximately €1.5 billion ($2.2 billion) of equity investment into indirect real estate vehicles globally.
Quinlan plots €450m lakeside development in Hungary
Irish firm Quinlan Private is planning a large-scale development at central Europe's largest lake in joint venture with a local. The €450 million ($663 million) development at Lake Balaton is to be carried out in a 50/50 joint venture with Hungarian real estate development company, SCD Group. Lake Balaton is located in the western half of Hungary, south-west of Budapest. The JV will develop a 178 hectare landbank around the lake in a scheme comprising 21 separate development sites that will house hotels, leisure parks and other tourism related and residential properties. The entire investment program is expected to take seven years to complete and will commence in 2008.
Drago, Sun Capital acquire Banco Santander offices for €2bn
Drago Real Estate Partners, Sun Capital and Pearl Group, an insurance business backed by Sun, teamed up to buy a network of 1,152 properties in one of the largest property deals of the year in Europe. Drago Real Estate Partners, which invests in the Iberian Peninsula, and Sun Capital run by UK entrepreneur Hugh Osmond together with Pearl agreed to pay €2.04 billion ($2.9 billion) for the real estate, with BNP Paribas and Allied Irish bank providing financing to the purchasers, according to a statement issued by Drago. Drago is managed by Mare Nostrum Capital Managers, which has already invested in residential and commercial properties and is led by Luis Iglesias and Oleguer Pujol.
Pramerica forms £150m partnership for self storage
Pramerica, the real estate investment and advisory business of US firm Prudential Financial, has renewed its involvement with British self storage group Big Yellow by forming a £150million (€210 million; $309 million) partnership to develop 25 further sites. Pramerica first invested in the company in September 1999 when Big Yellow had just one operating store and remained an investor when the company floated on the London Stock Exchange in 2000 before exiting from its investment in February 2005. Big Yellow has initially agreed to sell five sites currently under development to the partnership, along with an existing store in Leeds, which has 71,644 square feet of net rentable space. Big Yellow Group has also entered into a conditional agreement to sell two additional development sites in Manchester and Birmingham. The agreement to work exclusively together in the target regions is to last four years. The two parties aim to build high-quality self-storage buildings with 50,000 to 60,000 square feet of storage space targeting key cities such as Edinburgh, Glasgow, Liverpool and Sheffield. Big Yellow will manage site acquisitions, oversee development and operate the stores.
Lloyds TSB private equity arm invests in Uk property consultancy firm
Lloyds TSB's mid market private equity firm LDC has invested £40 million (€55 million; $82 million) in a London-based commercial property services firm. GVA Grimley, which employs 71 equity partners, provides consultancy services across the country, deriving half of £148 million annual revenues outside the capital. The cash injection by LDC will help fund corporate acquisitions and could pave the way for an eventual flotation of the company. Tim Farazmand, managing director of LDC in London, said: “We are confident that GVA Grimley's strong regional offices, growing London presence, broad client base and high proportion of stable consultancy revenue offer an excellent platform for growth,” he said. Chief executive Bob Barnett said: “As an LLP it is difficult for us to acquire large businesses without changing our capital and funding structure. LDC will help facilitate our continued growth and their investment is a testament to the diversity and stability of our business.”
From a reader:
In the article “Great expectations,” [EuroZone, PERE Nov 07] Mr. Marriott wrote, concerning cultural differences, “While US investors tend to prefer to be told by a plan sponsor he is shooting for the stars, European limited partners appreciate being told a very direct truth.”
I have interacted with a multitude of senior investment officers of major US pension plans who are charged with investing in the opportunistic sector, and to a person they view anyone who is “shooting for the stars” with a great deal of circumspection. That circumspection is evident in investment agreements which contain provisions such as preferred hurdle rates and clawbacks in order to more fully align interests and offer downside protection. We “tend to prefer” strategies based in fundamentals and platforms that offer execution capabilities. As you stated, it is apparent to investors on both sides of “the pond,” that the real estate sector has been operating with a wind at its back over the last several years. At best the wind is dormant or worse has changed direction. In any case we prefer that the wind coming from fund sponsors blows the truth.
Andrew J. PaulManaging Director International Real Estate Ohio Teachers Retirement System