According to Jones Lang LaSalle, the European market is witnessing a growing number of ' Equity and Expertise' (EE) joint ventures, where an equity buyer partners with an established real estate expert, who possesses a broad and in-depth knowledge of the market. Since the financial crisis there has been an upward trend for Equity and Expertise investments reaching approximately 70% of all deals done by Pension Funds and Sovereign Wealth Funds in the first half of 2013.
Since 2008, Pension Funds and Sovereign Wealth Funds have significantly increased direct real estate investments as a percentage of their overall real estate allocation. As part of this trend, they have been carefully selecting specialist operating partners to manage these direct investments as opposed to their historically greater utilization of generalist investment managers.
Rory Mepham, Head of Jones Lang LaSalle Corporate Finance CEE, commented: “With increasing frequency, we are seeing operating partners not simply providing services for fee’s but also further aligning their interests, with those of their investment partners, by providing co-investment capital”.
Notable examples over the last few months include an Allianz led consortium’s acquisition of Silesia City Center with ECE and the pan European joint venture between NBIM and Prologis.
“We are seeing more and more examples of clients coming to us for advice on selecting “best in class” operators to implement their business plans. This is most notably the case where intended strategies incorporate significant value added elements requiring sector or geographic expertise. We are also currently advising a number of operators seeking co-investment capital for either their existing assets or target acquisitions”, Rory Mepham added.
Source: Jones Lang LaSalle