EUROPE NEWS: Cornering the market

In November 2009, the US firm Cornerstone Real Estate Advisors put down its first marker in Europe by taking over real estate firm Protego just as Europe showed signs of recovery. Connecticut-based Cornerstone has executed at least two significant corporate developments since then, one in the US and another in Europe, demonstrating the firm is on a growth trajectory. This is a fact not lost on Julian Gabriel, who until recently was head of real estate at London-based Doughty Hanson & Co Real Estate and saw similarities in what he had taken part in during his 15 years at Doughty and what Cornerstone wanted to achieve.

Gabriel is to officially join Cornerstone on 5 January as the head of European investments, and is fired up by the opportunity, he told PERE in an interview. “This is an ideal opportunity,” he said. “It is very clear that Cornerstone is committed to building out the business across Europe, which is what I helped Doughty to do in the past. Hopefully I can help build a strong team locally and find deals.” He called working at Cornerstone a “natural fit” given his priority was to work with people he “got on with”. “It was important not to just go anywhere but where there was a cultural fit and a firm with a business strategy. They have a very good infrastructure in place and have started to build the business,” he added.

At the same time as completing the takeover of Protego at the start of 2010, Cornerstone also took on the real estate finance group of US firm Babson Capital Management – owned by the same parent company as Cornerstone, Massachusetts Mutual Life Insurance Company. More growth still came in Europe just this summer when Cornerstone took on Germany’s PAMERA Asset Management and its 38-strong team with offices in five German cities and a further €1 billion of AUM to add to the $44 billion Cornerstone already had around the world.

The firm is already operating in the core and value add spheres of real estate, but Gabriel’s hire is seen as a key plank in boosting the value-add strategy. Indeed, investors are expecting the firm to launch a value-add fund in the second quarter of next year aided by the addition of its new head of investment.

As well as identifying investments, Gabriel’s new role involves helping Cornerstone appoint senior real estate professionals in local markets. Deal-makers and asset managers are being sought in France, Italy, and Spain to add to those in offices in the UK, Sweden, Finland, The Netherlands, and Germany.

With around 90 people and $3.75 billion of assets in Europe – $2.5 billion of which it started with when it acquired Protego – Cornerstone’s chief executive officer in the region, Charles Weeks, said he hoped the firm could quickly “build out local teams” and that all positions would be filled by the end of the second quarter 2015. He said: “We are speaking to interesting candidates already and a number of them are known to Julian from his past and his activities in Europe.” He added the firm was seeing “compelling opportunities” in the region.

Gabriel’s decision to leave Doughty Hanson has been spurred by a strategic decision in 2013 not to launch another real estate fund in the wake of the passing of founder, Nigel Doughty. Gabriel said Doughty had supported the real estate team while “winding down” operations and managing assets for investors and also in helping the staff to find “new homes”. Cornerstone has approximately 350 employees across the globe, so now Gabriel has a much larger home than before.

And he joins at a particularly interesting time in terms of the company’s leadership.

Just last month, PERE revealed how David Reilly was stepping down as chief executive officer after nearly two decades at the firm. In a note to investors, which has been seen by PERE, Reilly revealed that he will be transitioning to the role of vice chairman on January 1. In this new position, he will be focused on strategic issues and special assignments, the note said.

Concurrently, Scott Brown, who currently is Cornerstone’s president, will take on the additional role of chief executive. Brown is being appointed to the real estate investment manager’s top post after less than a year at the firm, having taken over as president from Reilly when he joined Cornerstone in February. Indeed, in an announcement earlier this year, the firm noted that Brown’s hire was the result of “an extensive succession planning process.”

Brown said in a statement about Gabriel’s hire that his “knowledge and experience” of deploying capital across all key Western European markets should provide an “expanding pipeline” of opportunities for investors.