The move is part of an aggressive expansion strategy in the real estate sector with plans to double AuM over the next 3-5 years
Swiss family-run investment house Edmond de Rothschild has combined its three European real estate businesses to create a single, integrated investment management platform to be known as Edmond de Rothschild Real Estate Investment Management.
With 120 professionals working from 9 European offices, the new combine will manage real estate assets worth around €11 bn and will be led by Pierre Jacquot, the founder of the Swiss Orox Asset Management which was taken over by Edmond de Rothschild in 2012.
The operation is a natural step in the company’s strategy to expand the real estate activities and follows the acquisition of French asset manager Cleaveland in 2016 and the takeover of London-headquartered Cording Real Estate in 2017. Cording, led by Rodney Bysh, covers the UK, Germany and the Benelux and manages roughly €2.3 bn of assets.
The merger will allow Edmond de Rothschild to reach a ‘critical size’ and become more visible on the European investment management scene, according to newly-appointed CEO Pierre Jacquot. ‘We believe that with this operation we have reached a critical size and we will become more visible for institutional investors, which is one of our main targets at this point. We will be covering the main European markets and our clients will be able to benefit from this geographic diversification by gaining access to investments in other countries.’
The move will also allow the group to adopt a unified approach, he adds. ‘We are part of a regulated financial institution and this merger will allow us to be consistent across the board in terms of corporate governance, administration and compliance.’ The group, which specialises in private banking and asset management, has over €150 bn of assets worldwide.
While there are currently no plans to expand to other markets, Jacquot says the main priority is to grow the asset management platform with the launch of new strategies and products in the countries where the company is already active. ‘Our target is to double real estate assets under management in 3-5 years’ time,’ Jacquot tells PropertyEU in an interview. ‘Of course the sector is benefiting from the low interest rate environment but our growth plans reflect more our conviction around long-term responsible and impact investing. We believe in strong, reliable sectors and will be focused on strategies driven by sustainability and generating a positive impact on society and the environment.’
In terms of sectors, the group will be targeting three main strategies, the residential sector and the creation of new homes; light industrial and urban logistics and lastly, secondary offices to be redeveloped and converted to the latest environmentally-sustainable standards.
Last year the group launched a European last-mile logistics fund with a core-plus risk profile.The fund aims to deliver an average net income return of more than 6% per annum over a 10-year period.
New debt fund
Commenting on the priorities for this year, Jacquot says the group will be looking to expand the existing fund products particularly in the UK residential sector and in European real estate debt. ‘We have just announced our real estate debt strategy and we intend to launch our first real estate debt fund later this year,’ he notes. The new fund - Edmond de Rothschild’s first such vehicle – is planned to raise equity commitments over €300 mln potentially reaching a size of up to €1 bn.
It will cover the full debt load including whole loans, mezzanine, junior as well as preferred equity enabling borrowers to source the entire financing from a single source. Targeted returns will be between 6 and 10%, according to Jacquot, who declined to provide a precise figure. The fund will be managed from Luxembourg, and will focus on the Eurozone countries, with investments led from Frankfurt, where the company recently hired Deutsche Mittelstand Real Estate's former CEO Ralf Kind as real estate debt. Over time the debt offering is also planned to be expanded with a more conservative senior debt strategy to replicate the group’s infrastructure debt platform which currently manages €2.6 bn of assets.