MAGAZINE: Stam Europe diversifies further via core/core-plus residential fund

Stam Europe has launched a core/core-plus residential fund as part of its four-year asset and risk profile diversification strategy.

The Paris-headquartered company, which is one of the most established investment managers in the country having been founded in 1997, has up to now primarily been a value add/opportunistic office market player. However, the company has quietly been adding asset classes and strategies since 2014, with the new Opera Fund targeting the Parisian lettings market being a clear embarkation point for a concerted push into residential property.

Stam Europe said it was hoping to acquire up to €400 mln of assets for this new fund and that the first deal for Opera entailed two Haussmannian buildings in the 17th arrondissement. In December 2018, it attracted €84 mln of equity for the strategy, effectively seeding the fund with the Haussmannian assets acquired for a total cost of €110 mln.

Since 2015, the company has diversified into logistics, some retail property, and now core residential. A move into real estate debt is potentially in the offing as well, Stam Europe managing director Edward Bates (pictured) and head of investor relations Samantha Sudre Roux, told PropertyEU . ‘We have transformed from a highly regarded mono-strategy, mono-asset class firm to a full-service multi-strategy firm today,’ said Bates.

Antoine De Broglie launched the company 22 years ago and it invests primarily for non-French investors seeking exposure to French real estate.

Revealing further details of the residential fund, Roux said it was a long-term core/core-plus vehicle with a hold period of 12–15 years. Stam Europe hopes to achieve a 6%-plus net IRR at the fund level using moderate leverage capped at 50% of the fund.

Stam Europe has invested some equity in residential property before, however those deals have tended to be value add/opportunistic. The market has since become more challenging to make value-add returns from because of rules and regulations limiting investors’ ability to eject tenants. This has persuaded the company to seek a non-confrontational approach in a country famed for strong protection rights for occupiers.

Roux added: ‘We are looking to buy income-producing assets in bulk and seek to optimise income for the first six years of the fund’s life, then exit via unit-by-unit sales of the apartments. We have a core approach, not trying to evict tenants out of the buildings, which is something that doesn’t work well in France.’

All investors in the residential fund so far are European. ‘Demand for housing is less volatile and more resilient than the demand for offices, which in our view makes this strategy less risky and very suited to a core institutional portfolio,’ concluded Roux. ‘Residential as a letting strategy is I think taking off in Europe,’ added Bates.

Asked what other asset classes the firm planned to enter, he explained real estate debt investing was of great interest given its fixed income qualities during this stage of the cycle.


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