The central plot is that universal capital is descending on the region, which was a main talking point at MIPIM last month. And NorthStar is an example of that. Not only is the publicly-traded property company spinning out a European entity and buying portfolios on the Continent, but also it has just completed a deal to buy a 15 percent stake in European fund manager, Aerium Group.
So much for the main plot, but as with all plays there is a subplot that NorthStar’s role highlights. It is one that is focused upon in this issue of PERE. The avalanche of money towards Europe has brought its own challenges, one of them being how to retain and indeed hire the best talent. European managers are calling this the ‘battle for talent’ and it is preoccupying some minds. As Mikkel Bulow-Lensby, chief executive of Nordic Real Estate Partners says in our European Roundtable, this is what “keeps me up at night”.
Keeping an incentivized team together on the ground in their respective markets is a challenge when there are so many capital sources looking for operating expertize. Start-ups and new opportunities are being created, offering present day real estate professionals some choices. Indeed we are at that point of the cycle, post-beta plays, where the need for talent is keener than ever. It is a pertinent point for fund managers given how a lot of institutional investors are keener to work directly with the operating partners these days, and you can read an account of the stronger hand now held by operating partners in a special report.
How does NorthStar fit into this subplot? Well, while it was looking for a European platform to gain access to assets, Aerium Group was looking for a US partner to open up new relationships with North American capital. The firm has been on a recruitment drive and the money from NorthStar has helped pay for a stellar cast of professionals. And so the cycle repeats, and we love watching.